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Which of the following factors would NOT result in an upward shift in demand?
An upward shift in demand can occur if consumers develop a preference for the output.
True
What does the law of supply state?
The law of supply states that sellers are induced to provide more of a good at higher prices.
In the equation extit{Q s = 100 + 5P}, Q s represents the _____ quantities.
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What condition results in a lower quantity demanded despite price remaining the same?
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Match the following concepts related to demand with their correct implications:
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The supply curve slopes upward to represent a decrease in supply as prices increase.
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What happens to the supply quantity when prices increase, according to the law of supply?
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What does the intercept term of the supply function represent?
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Price elasticity reflects the responsiveness of sellers to changes in selling prices.
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What is the slope of the supply function given in the example?
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The factors affecting supply include the number of sellers, technology, and __________.
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Which of the following factors is negatively related to supply quantities?
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Match the type of supply elasticity with its description:
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An increase in the number of sellers will lead to a decrease in supply.
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What graphical representation indicates that suppliers provide greater quantities at the same price?
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What happens to market equilibrium when demand increases?
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A shift in supply to the left means suppliers are willing to provide more quantities at the same price.
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List one factor that could cause a supply shift to the right.
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An increase in input prices will likely lead to a __________ shift in the supply curve.
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Match the term with its correct definition:
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What is the result of a decrease in the number of sellers in a market?
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Higher prices of complements lead to a shift in the demand curve to the right.
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What effect does an upward shift in supply have on equilibrium quantity?
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Study Notes
Supply
- Supply is the quantity of a good sellers are willing to provide in the market.
- Supply is positively related to price - as price goes up, sellers offer more (Law of Supply).
- Supply can be represented by a function: Qs = 100 + 5P, where Qs is the quantity supplied and P is the price.
Factors Influencing Supply
- Number of Sellers: More sellers mean higher supply.
- Technology: Improved technology leads to higher supply.
- Productive Capacities: More productive capacities (e.g., factory size) lead to higher supply.
- Input Prices: Lower input prices (e.g., raw materials) lead to higher supply.
- Prices of Complements: Lower prices of complements (goods used together) lead to lower supply.
- Prices of Substitutes: Higher prices of substitutes (goods that can be used in place of another) lead to higher supply.
Changes in Supply
- Change in Quantity Supplied: Occurs when there is a change in price, represented by a movement along the supply curve.
- Shift in Supply: Occurs when one of the factors influencing supply changes, represented by a shift in the supply curve.
Price Elasticity of Supply
- Measures how much sellers change the quantity supplied in response to price changes.
- Perfectly Price Elastic Supply: Sellers are highly responsive to price changes; their supply curve is horizontal.
- Perfectly Price Inelastic Supply: Sellers are not responsive to price changes; their supply curve is vertical.
Demand
- Demand is the quantity of a good buyers are willing to purchase in the market.
- Demand is negatively related to price - as price goes up, buyers demand less (Law of Demand).
Factors Influencing Demand
- Consumer Income: Higher income leads to higher demand.
- Consumer Preferences: Higher preferences for a good lead to higher demand.
- Prices of Substitutes: Higher prices of substitutes lead to higher demand.
- Prices of Complements: Lower prices of complements lead to higher demand.
- Number of Consumers: More consumers lead to higher demand.
Changes in Demand
- Change in Quantity Demanded: Occurs when there is a change in price, represented by a movement along the demand curve.
- Shift in Demand: Occurs when one of the factors influencing demand changes, represented by a shift in the demand curve.
Market Equilibrium
- Equilibrium: The point where supply and demand are equal, represented by the intersection of the supply and demand curves.
- Equilibrium Price: The price at which quantity supplied equals quantity demanded.
- Equilibrium Quantity: The quantity bought and sold at the equilibrium price.
Shifts in Market Equilibrium
- Upward Shift in Demand: Increases equilibrium price and quantity.
- Upward Shift in Supply: Increases equilibrium quantity and decreases equilibrium price.
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Description
Explore the concept of supply in economics through this quiz. Understand how factors like technology, input prices, and market dynamics influence the quantity of goods supplied. Test your knowledge on the Law of Supply and its applications.
