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Questions and Answers
The law of supply states that as price increases, ceteris paribus, _____
The law of supply states that as price increases, ceteris paribus, _____
quantity supplied increases
What is the difference between supply and quantity supplied?
What is the difference between supply and quantity supplied?
Supply is the total amount of goods available; quantity supplied is how much is made available at each price level.
A vertical supply curve is said to be _____
A vertical supply curve is said to be _____
perfectly inelastic
Which of the following producers is most likely to face a relatively elastic supply curve in the short run?
Which of the following producers is most likely to face a relatively elastic supply curve in the short run?
What is the relationship between the price of a product and the quantity supplied?
What is the relationship between the price of a product and the quantity supplied?
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Study Notes
Law of Supply
- The law of supply asserts that, all else being equal, an increase in price leads to an increase in quantity supplied.
Supply vs. Quantity Supplied
- Supply refers to the total quantity of goods available in the market, while quantity supplied is the specific amount produced at various price points.
Supply Curve Characteristics
- A vertical supply curve indicates perfectly inelastic supply, meaning quantity supplied does not change regardless of price fluctuations.
Producers and Elasticity
- Artists are likely to experience a more elastic supply curve in the short run, indicating that their supply can change significantly with price changes compared to other producers.
Price-Quantity Supplied Relationship
- The relationship is direct; as product prices rise, quantity supplied increases, whereas a decrease in price leads to a reduction in quantity supplied, reflecting a consistent trend in market behavior.
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