Chapter 8 - Supply

A manufacturer of tinned beans mechanises its assembly line. This increases output by 30% and reduces labour by 20%. How and why will this affect supply curve S?

• S will move to the left due to an increase in average costs.

• S will move to the left due to an increase in the price of tinned beans.

• S will move to the right due to an increase in consumer demand.

• S will move to the right due to an increase in productivity.

The diagram shows a shift in the supply curve for New Zealand’s airlines from S₁ to S₂. What is the cause of this shift?

• a decrease in the costs of New Zealand’s airlines

• a decrease in the number of people wanting to fly to New Zealand

• an increase in the price of train and bus travel in New Zealand

• an increase in the tax on air travel in New Zealand

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?

• an increase in an indirect tax on petrol in China

• an increase in the price of cars in China

• an increase in the wages of Chinese car workers

• a new subsidy given to Chinese car manufacturers

According to the diagram, which policy does the government use and what effect does it have on the market?

• subsidy - increases supply

• subsidy - lowers quantity demanded

• tax - decreases demand

• tax - increases supply costs

The diagrams show the supply curve for an individual grower of tomatoes and for the total market supply of tomatoes. What explains the similarity of the two curves?

• As costs rise growers need to get a higher price to increase output.

• At the lower prices each grower supplies more tomatoes.

• The profitability per unit is the same for all growers irrespective of output.

• Supply is not always influenced by price.

The diagrams show changes in the market conditions for coffee. Which diagram shows the effect of a poor harvest of coffee beans?

• Diagram A

• Diagram B

• Diagram C

• Diagram D

What is not held constant when constructing the supply curve of a firm?

• indirect taxes and subsidies on the firm's products

• the level of technology used by the firm in production

• the price of the factors of production paid for by the firm

• the market price of the good produced by the firm

What can cause the supply curve for a product to shift to the right?

• an increase in demand for the product

• an increase in government subsidies to producers

• an increase in indirect taxes on the product

• an increase in the costs of production

A government subsidises the production of pineapples. This is likely to

• increase the price of pineapples

• raise the costs of supplying pineapples

• raise revenue for the government

• cause the supply of pineapples to increase at every price

A government taxes the production of cars. What is likely to decrease?

• the cost of supplying cars

• the price of cars

• the revenue for the government

• the supply of cars at every price