Law of Supply and Determinants of Supply Quiz
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Questions and Answers

What does the law of supply state?

  • As the price of a good or service decreases, the quantity supplied increases.
  • As the price of a good or service increases, the quantity supplied increases. (correct)
  • As the price of a good or service increases, the quantity supplied decreases.
  • As the price of a good or service decreases, the quantity supplied decreases.

    • How does a change in quantity supplied differ from a change in supply?

  • A change in quantity supplied is always caused by changes in production costs, while a change in supply is due to fluctuations in demand.
  • A change in quantity supplied represents a movement along the supply curve, while a change in supply shifts the entire curve. (correct)
  • A change in quantity supplied shifts the supply curve, while a change in supply represents a movement along the curve.
  • A change in quantity supplied is caused by non-price factors, while a change in supply is caused by price changes.

    • How does the law of supply impact producer behavior?

  • It causes producers to ignore market conditions when making supply decisions.
  • It leads to producers reducing their willingness to supply products.
  • It encourages producers to decrease production when prices rise.
  • It motivates producers to increase production as prices increase. (correct)

    • What role does market equilibrium play in relation to the law of supply?

    <p>Market equilibrium is reached when the quantity demanded equals the quantity supplied.</p> Signup and view all the answers

    How do non-price determinants of supply impact the supply of a product?

    <p>They can shift the entire supply curve.</p> Signup and view all the answers

    What is the primary incentive for producers to supply goods or services?

    <p>Generating revenue and profits</p> Signup and view all the answers

    How does a change in production costs typically influence a producer's willingness to supply a product?

    <p>Increase in production costs usually decreases the willingness to supply.</p> Signup and view all the answers

    What is the relationship between technological change and the supply curve?

    <p>Technological change can shift the entire supply curve.</p> Signup and view all the answers

    How does an increase in wages for workers affect the supply of a product?

    <p>Increase in wages leads to a decrease in supply due to higher production costs.</p> Signup and view all the answers

    What happens to the equilibrium price if both demand and supply increase?

    <p>Equilibrium price increases.</p> Signup and view all the answers

    How is the law of demand represented on a graph?

    <p>Downward-sloping demand curve.</p> Signup and view all the answers

    What is the impact of a decrease in consumer income levels on the equilibrium price?

    <p>Equilibrium price decreases.</p> Signup and view all the answers

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