Theory of Supply Quiz

What are the factors affecting the Supply of a good?

• Income of consumers

• Price of the product

• Population growth

• None of the above

What does a supply curve show?

• A firm will supply more when consumers’ purchasing power increases.

• The higher the price, the fewer goods are supplied as costs of production increase.

• The lower the price, the more profit is made by the firm.

• There is a positive relationship between quantity supplied and price.

The diagram shows a shift in the supply curve for cars in China from S1 to S2. What is the most likely cause of this shift in the supply curve?

• A decrease in an indirect tax on petrol in China

• An increase in the price of cars in China

• An increase in the wages of workers in car factories in China

• None of the above

How are the effects of Price changes on supply illustrated diagrammatically?

• As a shift of the entire curve

• As a contraction in supply

• As a movement along a supply curve

• As a decrease in quantity supplied

The diagram shows the supply curve for coffee.

The price of coffee increases from P1 to P2. How would this benefit firms in the coffee industry?

.

• A higher price gives firms the ability to increase profits

• A higher price gives firms the incentive to reduce total fixed costs.

• A higher price will encourage consumers to buy more coffee increasing total revenue.

• A higher price will encourage less firms to enter the market to supply coffee.

If the government stops subsidy on cocoa production, the supply curve of cocoa will

• become vertical.

• remain unchanged.

• shift to the left.

• shift to the right.

What is the difference between Supply and Quantity Supplied?

• Supply refers to a point on the curve, while quantity supplied is associated with the entire curve

• Supply refers to the demand curve

• Supply refers to the entire curve, while quantity supplied is associated with a point on the curve

• Supply and quantity supplied are the same

How are the effects of a change in a Non-Price factor on supply illustrated diagrammatically?

• As a shift of the entire curve

• As a movement along a supply curve

• As a decrease in quantity supplied

• As a contraction in supply

What does a Rightward Shift in the Supply Curve indicate?

• An increase in supply

• A decrease in supply

• A decrease in price

• An increase in price

What would cause the supply curve for an agricultural product to shift to the right?

• An increase in the costs of production

• An increase in the price of substitutes

• An increase in the price of the good

• An increase in the productivity of farms