TEST on Chapter 5 (Supply Side)

The Law of Supply states: (Select ONE)

• If the price of a good increases, there will be no change in quantity supplied.
• Consumers will exhaust their incomes as they purchase goods and services at given absolute prices.
• Suppliers will offer more for sale at high prices and less at lower prices.

A Market Supply Curve for a product indicates that: (Select ONE)

• At the product’s price falls, consumers buy less of the good.
• There is a direct (positive) relationship between price and quantity supplied.
• As a product’s price rises, consumers buy more of the good.

In the figures BELOW, which best demonstrates a Change in Quantity Supplied due to an increase in the price of Good A? (Select ONE)

• The movement from S1 to S2 in Graph A
• The movement from S2 to S1 in Graph A
• The movement along S0 from P1 to P2 in Graph B
• The movement along S0 from P2 to P1 in Graph B

In the figures BELOW, an Increase in Cost of Inputs is best demonstrated by a: (Select ONE)

• The movement from S1 to S2 in Graph A
• The movement from S2 to S1 in Graph A
• The movement along S0 from P1 to P2 in Graph B
• The movement along S0 from P2 to P1 in Graph B

For Suppliers, what must be considered when setting Price of a product? (Select ONE)

• Demand for the good or service.
• Costs involved in production.
• Market Supply for the product.

In order for suppliers to Increase the Productivity of workers, what must they concentrate on? (Select ONE)

• Management must motivate workers to work harder or more efficiently.
• Introducing new machinery or an industrial process to improve productivity.
• Suppliers expect prices to increase in the future, so production will decrease now.

With an Increase in Productivity, what will happen on/with the Supply Curve? (Select ONE)

• Shift to the Left
• Shift to the Right
• No Change

How does the introduction of New Technology, such a a new machine used in production, help to Increase Supply? (Select ONE)

• Suppliers expect prices to increase in the future, so production will decrease now.
• The money will help to decrease costs, thus increasing productivity.
• New machinery will increase productivity, which helps to reduce costs.

What would be the reaction of suppliers if they EXPECT the cost of materials used to make their product is going to RISE in the future? (Select ONE)

• Suppliers expect prices to increase in the future, so production will decrease now.
• Introducing new machinery or an industrial process will improve productivity.
• If suppliers expect costs to rise, they will increase production now to maintain profits.

Which industry are Subsidies most used for in the United States? (Select ONE)

• Oil Industry
• Computer Technology
• Farming Industry