SG5 - 5 SUPPLY OVERVIEW 1. Supply tells how much of a good...

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5 SUPPLY OVERVIEW 1. Supply tells how much of a good a seller is willing and able to produce at each price. 2. The quantity supplied and supply are not the same. The quantity supplied is the amount a firm is willing and able to produce at a particular price. 3. The law of supply states that the quantity supplied increases as the price goes up. There is a direct relation between the price and the quantity supplied. 4. Movements along the supply curve are caused only by a change in the price of the good. 5. Movements of the supply curve occur when a determinant of supply changes. 6. The determinants of supply are nature, the cost of production, the price of other goods, and the expectation of a change in price. Study Guide for Chapter 5, Introductory Economics , Copyright 2005 Arleen and John Hoag 1
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MATCHING ______ 1. supply ______ 2. quantity supplied ______ 3. law of supply ______ 4. change in quantity supplied ______ 5. change in supply ______ 6. determinants of supply a. include the factors that cause supply to shift b. is the quantity of a good produced at a given price c. the amount a seller is willing and able to produce at each price, all else held constant d. says that the quantity supplied rises as the price rises e. is due to a change in the price of the good f. is due to a change in a determinant of supply TRUE-FALSE ______ 1. If there is a change in the price, then supply changes. ______ 2. To cause supply to change, there must be a change in the price of the good. ______ 3. If there is an increase in the price of an input, then supply will shift left. ______ 4. A shift left in the supply is also called a rise in supply. ______ 5. The law of supply says that what is demanded is supplied. Study Guide for Chapter 5, Introductory Economics , Copyright 2005 Arleen and John Hoag 2
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PROBLEMS l.a. Plot each price and quantity pair from the table. Connect the points to form a supply curve. Price Quantity $6 14 5 12 4 10 3 8 2 6 1 4 b. As price rises, what happens to the quantity supplied? ___________________________________________________________________________ c. As price falls, what happens to the quantity supplied? ___________________________________________________________________________ d. At a price of $5, what is the quantity supplied? e. Supply is an example of a ____________________ relation. ___________________________________________________________________________ f. What are the determinants of supply? _______________________________________ ____________________________________________________________________________ 2. Suppose that because of a change in technology, the new supply information is as
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SG5 - 5 SUPPLY OVERVIEW 1. Supply tells how much of a good...

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