2.2 Assesment on Supply

The different quantities of goods that consumers are willing and able to buy at different prices is known as:

• Price

• Income Effect

• Law of Demand

• Demand Schedule

Answer explanation

The different quantities of goods that consumers are willing and able to buy at different prices is known as a Demand Schedule.

The inverse relationship between price and quantity demanded is referred to as:

• Law of Diminishing Marginal Utility

• Demand

• Substitution Effect

• Law of Demand

Answer explanation

The inverse relationship between price and quantity demanded is referred to as the Law of Demand.

If the price goes up for a product, consumers buy less of that product and more of another substitute product (and vice versa). This is known as:

• Price

• Income Effect

• Substitution Effect

• Demand Schedule

Answer explanation

The correct choice is Substitution Effect because when the price of a product increases, consumers tend to buy more of a substitute product instead.

If the price goes down for a product, the purchasing power increases for consumers allowing them to purchase more. This is an example of:

• Price

• Income Effect

• Law of Diminishing Marginal Utility

• Demand Schedule

Answer explanation

When the price of a product decreases, consumers can afford to buy more with the same income, leading to an increase in purchasing power. This is known as the Income Effect.

As you consume anything, the additional satisfaction that you will receive will eventually start to decrease. This concept is known as:

• Price

• Income Effect

• Law of Diminishing Marginal Utility

• Demand Schedule

Answer explanation

The correct concept is the Law of Diminishing Marginal Utility, which states that as you consume more of a good or service, the additional satisfaction you receive decreases over time.

A table that illustrates the price and quantity demanded for a market or firm is called:

• Demand Schedule

• Demand

• Substitution Effect

• Law of Demand

Which of the following does not shift a demand curve for a specific item?

• Price

• Income Effect

• Law of Diminishing Marginal Utility

• Demand Schedule

According to the Law of Supply, what happens as price increases?

• The quantity producers make decreases.

• The quantity producers make stays the same.

• The quantity producers make increases.

• The quantity producers make is unrelated to price.

Why do profit-seeking firms have an incentive to produce more at higher prices?

• Because it decreases their overall revenue.

• Because it increases their overall costs.

• Because it increases their overall revenue.

• Because it has no effect on their profits.

What will happen to the supply if the price of resources increases?

• Supply will decrease

• Supply will increase

• Supply will remain constant

• Supply will fluctuate unpredictably

Answer explanation

If the price of resources increases, it becomes more expensive to produce goods, leading to a decrease in the supply as producers are less willing to supply at higher costs.