Determinants of Supply Quiz
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Questions and Answers

What happens to the quantity of a good or service that producers are willing to supply as the price of the good or service increases?

  • It generally increases, assuming other factors remain constant. (correct)
  • It fluctuates randomly, assuming other factors remain constant.
  • It remains constant, assuming other factors remain constant.
  • It generally decreases, assuming other factors remain constant.
  • How do production costs affect the quantity that producers are willing to supply?

  • Increased production costs have no impact on the quantity supplied.
  • Increased production costs always lead to an increase in the quantity supplied.
  • Increased production costs may lead to producers supplying less at a given price. (correct)
  • Increased production costs lead to a decrease in the price of the good or service.
  • What effect can advances in technology have on production and supply?

  • Advances in technology have no impact on production and supply.
  • Advances in technology always lead to decreased efficiency in production and increased costs.
  • Advances in technology can lead to increased efficiency in production, reducing costs and potentially increasing the quantity supplied. (correct)
  • Advances in technology only affect the quality of the goods, not the quantity supplied.
  • What is the term used for factors that influence the quantity of a good or service that producers are willing and able to offer for sale?

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    What relationship is expressed by the law of supply?

    <p>As the price of a good or service increases, producers are generally willing to supply more of it, assuming other factors remain constant.</p> Signup and view all the answers

    Study Notes

    Supply Dynamics

    • As the price of a good or service increases, producers are generally willing to supply a greater quantity due to the potential for higher revenue. This is known as the positive relationship between price and quantity supplied.

    Impact of Production Costs

    • Higher production costs can lead to a decrease in the quantity that producers are willing to supply, as their profit margins diminish. Conversely, lower production costs typically increase supply since profitability improves.

    Technological Advancements

    • Advances in technology can enhance production efficiency, often leading to reduced costs and increased supply. This allows producers to create more output at the same or lower cost, making them more competitive in the market.

    Influencing Factors of Supply

    • Factors that influence the quantity of a good or service that producers are willing and able to offer for sale are referred to as "supply determinants." These can include production costs, technology, taxes, subsidies, and the number of suppliers.

    Law of Supply

    • The law of supply expresses a direct relationship between price and quantity supplied: as the price of a good rises, the quantity supplied also increases, assuming all other factors remain constant. This reflects producers' response to market prices.

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    Description

    Test your knowledge of the determinants of supply with this quiz. Explore factors that influence the quantity of goods or services producers are willing to offer for sale, including the impact of price changes. See how well you understand the law of supply and its key determinants.

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