Question 1

A technological improvement in producing good A would be a shift in the:

Accepted Answer

Technological improvement in producing good A will lead to an increase in supply, shifting the supply curve for A to the right. This is because the technology allows producers to produce more output at a lower cost, increasing the willingness of producers to produce and sell more of the good at each price level.

Question 2

Which of the following will cause a movement upward along a supply curve?

Accepted Answer

An increase in market price of a good will cause producers to receive a higher return for their output and will provide an incentive for them to increase the quantity supplied at each price. This causes a movement upward along the supply curve. Increases in raw-material costs, labor costs, or the cost of machinery will cause a decrease in producer profits, and thus a decrease in quantity supplied at each price, causing a leftward shift in the supply curve.

Question 3

How will an increase in lumber prices influence the home construction market?

Accepted Answer

An increase in lumber prices will lead to an increase in construction costs for home builders. As a result, builders may reduce the supply of newly constructed homes as it becomes more expensive to build them. This decrease in supply could also lead to higher prices for buyers, which could further reduce demand for newly constructed homes.

Question 4

Which of the following corresponds to the definition of the supply curve?

Accepted Answer

The supply curve shows a positive relationship between the price of a good or service and the quantity supplied by producers. As the price of a good or service increases, producers are willing and able to supply more of it to the market. Therefore, choice C corresponds to the definition of the supply curve.

Question 5

When economists say the supply of a product has decreased, they mean that:

Accepted Answer

When economists say the supply of a product has decreased, they mean that the supply curve has shifted to the left. This shift can be caused by various factors, such as an increase in production costs, a decrease in the number of suppliers, or a decrease in the availability of raw materials. As a result of this shift, the quantity supplied at each price point will be lower than before.

Question 6

Which of the following events would increase the supply of tomatoes?

Accepted Answer

When the cost of production decreases, the supply will increase. Therefore, a decrease in the cost of fertilizers for tomato plants would increase the supply of tomatoes.

Question 7

With an upward-sloping supply curve, which of the following is true?

Accepted Answer

An upward-sloping supply curve indicates that as the price decreases, the quantity supplied decreases, which is a fundamental principle of supply in economics.

Question 8

Tasha decides that when homes in her neighborhood are selling for $150,000 she will not sell her home. When average prices rise to $175,000, she decides that she will put her home on the market. This is an example of:

Accepted Answer

This is an example of a positively-sloped supply curve, as Tasha is willing to supply her home at a higher price (when the market price reaches $175,000) than she would at a lower price (when the market price is $150,000).

Question 9

A decrease in supply means that:

Accepted Answer

A decrease in supply means that there is a reduction in the amount of the good or service available in the market. This will result in a decrease in the quantity supplied at every price, leading to a leftward shift of the supply curve. As a result, the equilibrium price will increase and the equilibrium quantity will decrease. There is no direct relationship between a decrease in supply and an increase in demand, so choice A is incorrect. Choice B is also incorrect because a decrease in supply will lead to a decrease in the quantity demanded due to the higher price. Choice E is incorrect because a decrease in supply results in a shift inward of the supply curve, not outward.

Question 10

Which of the following would increase the supply of laptop computers?

Accepted Answer

A technological improvement that lowers the cost of producing laptop computers would decrease the cost of producing each unit, resulting in an increase in the supply of laptops. Higher wage rates would increase the cost of producing each unit, resulting in a decrease in supply. An increase in the price of computer chips would increase the cost of producing each unit, resulting in a decrease in supply.

Question 11

When economists say the quantity supplied of a product has decreased, they mean the:

Accepted Answer

The answer of When economists say the quantity supplied of...

Question 12

Which of the following will cause a movement along the supply curve?

Accepted Answer

Changes in the market price of a good, other things held constant, will cause a movement along the supply curve. This is because when the market price of a good increases, producers are willing to supply more of the good at each price, and conversely, when the market price of a good decreases, producers are willing to supply less of the good at each price. This movement along the supply curve is known as a change in quantity supplied.

A, B, and C will shift the supply curve itself, rather than causing a movement along it. An increase or decrease in raw materials costs or labor costs will affect the production costs of a good and shift the supply curve accordingly. Changes in the cost of the machinery used to make a good will also impact production costs and shift the supply curve.

Question 13

Which of the following will not cause a movement along the supply curve?

Accepted Answer

Advances in technology will cause a shift in the supply curve, not a movement along it.

Question 14

Which of the following will reduce the supply of motorcycles?

Accepted Answer

An increase in taxes imposed on motorcycle producers will increase their production costs, making it more expensive to produce motorcycles. This will likely lead to a decrease in the supply of motorcycles. The other options given will either have no effect on the supply of motorcycles (A and D) or increase the supply (C).

Question 15

The supply curve reflects the:

Accepted Answer

The supply curve reflects a positive relationship between price and quantity offered, meaning as the price increases, the quantity supplied also increases.

Question 16

When economists say the quantity supplied of a product has increased, they mean the:

Accepted Answer

The answer of When economists say the quantity supplied of...

Question 17

If the United Auto Workers union can obtain a substantial wage increase for auto workers, there will be a(n):

Accepted Answer

If the United Auto Workers union obtains a substantial wage increase for auto workers, the cost of producing automobiles will increase for the auto manufacturers. This will ultimately lead to a decrease in the supply of automobiles as the auto manufacturers will produce fewer automobiles at each price level. Therefore, the supply curve will shift to the left.

Question 18

A supply curve:

Accepted Answer

A supply curve illustrates the positive relationship between price and quantity supplied, as suppliers are willing to supply more at higher prices.

Question 19

Which of the following is most likely to increase the supply of corn?

Accepted Answer

Farmers that grow soybeans can also grow corn, and the price of soybeans dropping by 75 percent means that farmers will switch to growing more corn, increasing the supply. The other options either have no effect on corn supply (A and B) or decrease the supply (C).

Question 20

An increase in the number of producers will:

Accepted Answer

Market supply is the sum of all individual supply curves, so an increase in the number of producers will increase the market supply as there are now more individual supply curves contributing to the market supply.

Quiz 3: Market Demand and Supply