Economics Chapter 5 Quiz
Questions: 16 · 10 minutes
1. What does the law of supply state, holding other factors constant?
Price and quantity supplied generally move in opposite directions.
A higher price generally causes the entire supply curve to shift left.
A lower price generally leads consumers to purchase a smaller quantity.
A higher price generally leads producers to offer a greater quantity for sale.
2. Which statement best defines quantity supplied?
The total amount consumers want to purchase at every possible price
The amount producers are willing and able to sell at a particular price during a specified period
The greatest amount an economy could produce using all available resources
The amount of a product actually sold after the market reaches equilibrium
3. A city offers producers a subsidy for each solar panel they manufacture. Which outcome is most likely, other things equal?
A movement down the existing supply curve because the buyer's price falls
A rightward supply shift because the subsidy lowers producers' effective cost
A leftward supply shift because the subsidy adds a government expense
A leftward demand shift because subsidies apply only to sellers
4. A government places a new per-unit tax on producers of bottled juice. If the market price is held constant, what is the most likely immediate supply effect?
Supply shifts right because the tax raises government revenue.
Quantity supplied rises along the existing supply curve.
Demand shifts left because every producer tax is paid entirely by buyers.
Supply shifts left because the tax raises the cost of supplying each unit.
5. A manufacturer adopts technology that lowers the labor time required to produce each unit. What is the most likely result, other things equal?
Quantity supplied decreases through a movement down the existing curve.
Supply decreases because fewer labor hours are used per unit.
Demand increases, shifting the demand curve to the right.
Supply increases, shifting the supply curve to the right.
6. A binding price ceiling holds a product's price below equilibrium. At that controlled price, quantity demanded is 900 units and quantity supplied is 600 units. What does the market face?
A shortage of 300 units, with upward pressure on price if the control were removed
An equilibrium because some units are both demanded and supplied
A shortage of 600 units because that is the quantity supplied
A surplus of 300 units that creates downward pressure on price
7. Coffee growers expect the price of storable coffee beans to be substantially higher next month. How might this expectation affect current supply?
Current supply may decrease if growers hold back beans to sell later.
Current quantity supplied must rise along the same curve even if today's price does not change.
Current demand must fall because growers control buyer expectations.
Current supply must increase because expected price and present supply always move together.
8. Which graph description represents an increase in supply?
At every given price, producers are willing and able to offer a larger quantity.
Producers move upward along one supply curve after the good's price rises.
Consumers purchase a larger quantity at every given price.
The supply curve becomes the demand curve at equilibrium.
9. Several new firms enter a competitive market for reusable bottles. What is the most likely effect on market supply?
Market supply increases because more sellers offer bottles at each price.
Market quantity supplied decreases because each firm receives a smaller market share.
Market supply stays fixed because entry affects only demand.
The market moves down an unchanged supply curve because the number of sellers changes.
10. Price rises by 10%, and quantity supplied rises by 20%. Using the percentage method, what is the price elasticity of supply?
0.5, so supply is inelastic over this change
10, because the two percentage changes should be subtracted
2, so supply is elastic over this change
30, because the two percentage changes should be added
11. A supply schedule shows 40 units supplied at $5 and 55 units supplied at $6. What is the change in quantity supplied when price rises from $5 to $6?
A decrease of 15 units
An increase of 55 units
An increase of 15 units
An increase of 1 unit
12. A bakery offers 120 loaves per day when the price is $3 and 160 loaves when the price is $4. If nothing else changes, how should this difference be described?
A decrease in demand for bread
An increase in quantity supplied along the bakery's supply curve
A leftward shift of the bakery's supply curve
An increase in the bakery's supply
13. Which change would most directly shift the supply curve for wooden tables to the left?
A decrease in consumers' income
An increase in the market price of wooden tables
An increase in the price of lumber used to make the tables
An increase in consumer preference for metal furniture
14. The market price of strawberries rises, while weather, wages, technology, and the number of farms remain unchanged. What should happen according to the law of supply?
The supply curve shifts right because price is higher.
Farms increase quantity supplied by moving along the existing supply curve.
The supply curve shifts left because consumers pay more.
Quantity supplied remains fixed because only non-price factors affect producers.
15. At a price of $10, Firm A supplies 30 units, Firm B supplies 20 units, and Firm C supplies 15 units. Assuming these are all sellers, what is market quantity supplied at that price?
30 units, because the largest firm's output determines market supply
20 units, because market supply uses the average firm's output
65 units, because individual quantities supplied are added horizontally
450 units, because the firms' quantities are multiplied
16. What is the usual effect of a change in a good's own price, with all other supply factors unchanged?
It shifts the supply curve because production conditions have changed.
It shifts the demand curve because buyers respond to price.
It changes supply but leaves quantity supplied unchanged.
It causes a movement along the existing supply curve.