Economics Law of Supply

The law of supply states that as the price of a good declines, the quantity supplied of that good

• remains the same.

• decreases.

• increases.

• disappears.

When artists pass away, the supply of their paintings most likely becomes

• Worthless

• Plentiful

• Elastic

• Inelastic

The study of the interaction between individuals and businesses is known as

• The Law of Supply

• Macroeconomics

• Microeconomics

• Elasticity

The amount that a good is sold for is its

• Elasticity

• Price

• Profit

• Supply

When a company produces goods for sale, those goods must be

• created in ways that meet consumer demand.

• designed in ways that are highly creative.

• priced lower than the goods sold by another company.

• created in quantities that are relatively scarce.

Which best describes what happens to the amount of a good or service that is supplied to consumers?

• The amount of a good or service can change.

• The amount of a good or service always remains the same.

• The amount of a good cannot change.

• The amount of a service cannot change.

The law of supply states that as the price of a good rises, the quantity supplied of that good

• disappears.

• decrease

• remains the same

• increase

Sample scenario:

A factory produces blue and green widgets, both at equal production costs. In one day, the factory can make 20 widgets of either color. The factory has been making 10 blue and 10 green widgets per day because they both sell for $5.00. Recently, the price of blue widgets has increased from $5.00 each to $8.00 each.

How does the law of supply say the factory will respond to the increase in the price of blue widgets?

• by increasing the number of green widgets supplied

• by not changing the number of blue widgets produced

• by increasing the number of blue widgets supplied

• by decreasing the number of blue widgets supplied

In order to compete successfully, a producer must produce goods that are

• more expensive than those of competitors.

• of a lesser quality than those of competitors.

• of a higher quality than those of competitors.

• created without worrying about the costs of production.

Which best describes the role the availability of resources plays when a company is considering whether to produce a certain good?

• Resources can always be obtained, no matter what the cost.

• If a resource is difficult to obtain, production costs will be high.

• Resources play no part in a company’s decision to produce a good.

• If a resource is easy to obtain, production costs will be high.