Deck 5: How Markets Work

Question 1

A supply curve shows how much producers want to supply at each price.

Answer 1

False

Question 2

When is the supply curve likely to shift outwards?

A) If productivity falls.
B) If wage costs fall.
C) If the number of producers decreases.
D) If energy prices increase.

Answer 2

b

Question 3

A change in quantity supplied occurs with a change in what?

A) Price.
B) Technology.
C) Costs.
D) The number of producers.

Answer 3

a

Question 4

An improvement in the methods of production that reduces costs will lead to a movement along the supply curve.

Question 5

An increase in raw material prices with lead to a movement along the supply curve.

Question 6

If the quantity demanded is greater than the quantity supplied this is known as 'excess demand' or a ________.

Question 7

If the quantity demanded is less than the quantity supplied this is known as 'excess supply' or a _______.

Question 8

A shift in demand is likely to have more effect on the equilibrium price than quantity if supply is price elastic.

Question 9

An increase in demand has more effect on the equilibrium quantity than the price if supply is price inelastic.

Question 10

In the free market the price is set by producers.

Question 11

A maximum price set above the equilibrium price in a free market leads to excess supply.