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Law of Supply and Determinants of Supply Quiz

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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?

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

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

They can shift the entire supply curve. Signup and view all the answers

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

Generating revenue and profits Signup and view all the answers

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

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

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

Technological change can shift the entire supply curve. Signup and view all the answers

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

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

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

Equilibrium price increases. Signup and view all the answers

How is the law of demand represented on a graph?

Downward-sloping demand curve. Signup and view all the answers

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

Equilibrium price decreases. Signup and view all the answers