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Questions and Answers
The law of supply states that, other things being equal, when the price of a good rises, the quantity supplied increases.
The law of supply states that, other things being equal, when the price of a good rises, the quantity supplied increases.
True
Quantity supplied refers to the amount of a good that sellers are willing and able to sell.
Quantity supplied refers to the amount of a good that sellers are willing and able to sell.
True
The market supply curve is the vertical summation of all individual supply curves.
The market supply curve is the vertical summation of all individual supply curves.
False
When the price of a good falls, the quantity supplied will also fall, according to the law of supply.
When the price of a good falls, the quantity supplied will also fall, according to the law of supply.
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A shift of the supply curve can be caused by changes in factors like input prices or technology, not by price changes.
A shift of the supply curve can be caused by changes in factors like input prices or technology, not by price changes.
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A movement along the supply curve happens when there is a change in price, holding other factors constant.
A movement along the supply curve happens when there is a change in price, holding other factors constant.
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Equilibrium in a market occurs when the quantity supplied equals the quantity demanded.
Equilibrium in a market occurs when the quantity supplied equals the quantity demanded.
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A surplus occurs when the quantity demanded exceeds the quantity supplied.
A surplus occurs when the quantity demanded exceeds the quantity supplied.
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A surplus causes sellers to cut prices to reach equilibrium.
A surplus causes sellers to cut prices to reach equilibrium.
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A shortage leads to sellers raising prices, causing the quantity demanded to decrease and the quantity supplied to increase.
A shortage leads to sellers raising prices, causing the quantity demanded to decrease and the quantity supplied to increase.
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Study Notes
Law of Supply
- Higher prices lead to increased quantity supplied.
- Quantity supplied refers to the amount sellers are willing and able to sell.
- The market supply curve is the combined representation of all individual supply curves.
Shifters of Supply
- Changes in input prices or technology can shift the supply curve.
- Price changes do not shift the supply curve.
Movement Along the Supply Curve
- A change in price causes a movement along the supply curve, assuming all other factors remain constant.
Market Equilibrium
- Equilibrium occurs when the quantity supplied equals the quantity demanded.
Market Surplus
- A surplus occurs when the quantity supplied exceeds the quantity demanded.
- Sellers reduce prices to reach equilibrium when a surplus exists.
Market Shortage
- A shortage occurs when the quantity demanded exceeds the quantity supplied.
- Sellers increase prices to reach equilibrium when a shortage exists.
- As prices rise, the quantity demanded decreases and the quantity supplied increases.
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Description
Test your understanding of the law of supply. This quiz explores how changes in price affect the quantity of goods supplied in the market. Ideal for students studying economics and market principles.
