Understanding the Law of Supply

What does the Law of Supply state?

• As the price of a good decreases, the quantity supplied increases.

• As the price of a good increases, the quantity supplied increases.

• As the price of a good increases, the quantity supplied decreases.

• The quantity supplied is independent of the price.

Which of the following is a basic assumption of the Law of Supply?

• Supply is constant regardless of price.

• Other factors affecting supply remain constant.

• Demand is always equal to supply.

• Price has no effect on supply.

Identify the term: The graphical representation of the Law of Supply.

• Supply curve

• Demand curve

• Equilibrium curve

• Price curve

• Decrease

• Increase

• No change

• Cannot be determined

Explain why a supply curve typically slopes upwards.

• Because higher prices incentivize producers to supply more.

• Because lower prices incentivize producers to supply more.

• Because supply is independent of price.

• Because demand decreases as price increases.

A company notices that as they increase the price of their product, the quantity they are willing to supply also increases. Which economic principle does this illustrate?

• Law of Demand

• Law of Supply

• Law of Diminishing Returns

• Law of Equilibrium

Consider a scenario where the price of raw materials decreases. How might this affect the supply curve for a product?

• The supply curve shifts to the left.

• The supply curve shifts to the right.

• The supply curve becomes vertical.

• The supply curve remains unchanged.

A farmer decides to plant more wheat as the market price for wheat rises. What economic concept is the farmer responding to?

• Law of Demand

• Law of Supply

• Price Elasticity

• Market Equilibrium

Analyze how a technological advancement in production might affect the Law of Supply.

• It would decrease the quantity supplied at each price level.

• It would increase the quantity supplied at each price level.

• It would have no effect on the quantity supplied.

• It would make the supply curve vertical.

A new government policy imposes a tax on the production of a good. Predict how this might affect the supply curve.

• The supply curve shifts to the left.

• The supply curve shifts to the right.

• The supply curve becomes horizontal.

• The supply curve remains unchanged.