Theory of Supply Quiz

What is the Law of Supply?

• The Law of Supply states that as the price of a good or service increases, the quantity supplied by producers increases, and vice versa, assuming all other factors remain constant.

• The Law of Supply states that as the price of a good or service remains constant, the quantity supplied by producers remains constant.

• The Law of Supply states that as the price of a good or service increases, the quantity supplied by producers decreases.

• The Law of Supply states that as the price of a good or service decreases, the quantity supplied by producers decreases.

Explain the concept of Supply Curve.

• The supply curve is a graphical representation of the quantity of a good or service that producers are willing to supply at different prices.

• The supply curve is a graphical representation of the relationship between price and quantity supplied.

• The supply curve shows the demand for a good or service at different prices.

• The supply curve is only applicable to services, not physical goods.

List three factors that can affect supply.

• demand, weather conditions, consumer preferences

• production costs, technological advancements, government regulations

• changes in income, changes in population, changes in price of other goods

• The price of the good itself, tastes and fashions

How does an increase in the price of raw materials affect supply?

• An increase in the price of raw materials usually decreases supply.

• An increase in the price of raw materials has no effect on supply.

• An increase in the price of raw materials causes supply to remain constant.

• An increase in the price of raw materials increases supply.

How does technology impact supply?

• Technology hinders supply chain management

• Technology reduces production capabilities

• Technology improves supply chain management, enhances production capabilities, and enables the creation of innovative products and services.

• Technology limits the creation of innovative products and services

Discuss the relationship between price and quantity supplied.

• Quantity supplied decreases as price increases.

• Price and quantity supplied have a negative relationship.

• Price has no impact on quantity supplied.

• Price and quantity supplied have a positive relationship.

What role does government regulation play in influencing supply?

• Government regulation has no impact on supply.

• Government regulation can increase the cost of production, affecting supply negatively.

• Government regulation always leads to an increase in supply.

• Government regulation only affects demand, not supply.

Which of the following causes an extension of supply?

• improvements in technology

• increase in labour productivity

• consumers' incomes

• a change in price

A shift to the right of the supply curve shows:

• an increase in quantity supplied

• an increase in supply

• an extension of supply

• a contraction of supply

A rise in the price of steel will cause the supply curve for motor vehicles to:

• shift to the right

• shift to the left

• become steeper

• intersect with the demand curve