Ch. 4 Supply

Master the law of supply and producer incentives in economics!

The desire and ability to produce and offer a product demand supply production profit The law of supply states that when prices go up, quantity supplied goes down; when prices go down, quantity supplied goes up when prices go down, quantity supplied goes down; when prices go up, quantity supplied goes up when prices go up, supply goes down; when prices go down, supply goes up when prices go down, supply goes down; when prices go up, supply goes up A supply schedule is a table showing how much of a product someone is willing and able to buy graph showing how much of a product someone is willing and able to buy table showing how much of a product someone is willing and able to sell graph showing how much of a product someone is willing and able to sell Supply curves are created using the assumption that all economic factors remain constant except demand elasticity price production What motivates producers to increase supply? efficient demand profit thrift What do the different points along a supply curve show? changes in costs changes in productivity changes in quantity supplied changes in supply What is it called when government controls business behavior through rules or laws? duty inspection regulation subsidy What is the most likely outcome when the number of producers of a particular product rises? a decrease in competition a rise in price an increase in supply a decrease in supply Which of the following are examples of government actions? excise tax, input costs, regulation productivity, regulation, subsidy excise tax, input costs, productivity excise tax, regulation, subsidy Elasticity of supply measures how responsive consumers are to price change government is to price change producers are to price change workers are to price change Which of the following examples demonstrates elastic supply? The price of submarine sandwiches rises 50 percent; the quantity supplied by the deli rises 30 percent. Gasoline prices rise from $1.50 to $3.00 a gallon, and refineries increase production 10 percent. Nurseries cut the price of rose bushes in half, but because the bushes are two years old, supply remains fixed. A video game fails to be a hit, stores discount it by 30 percent, and the game company lowers production by 50 percent. What is the most common reason for supply to be inelastic? the difficulty of changing the amount produced the lack of competition among producers the amount of government regulation the lack of demand among consumers Which of the following is most likely to have elasticity of supply for their product? apple grower car manufacturer electronics manufacturer wedding-cake baker What do both elasticity of demand and elasticity of supply measure? responsive to price responsive to quantity desires of consumers desires of producers