Unit 2.2 Quiz

Given the supply and demand graph shown, explain how the equilibrium price and quantity are determined and describe what would happen if the market price was set above the equilibrium price.

• The equilibrium price and quantity are determined where the supply and demand curves intersect; if the market price is above equilibrium, there will be a surplus as quantity supplied exceeds quantity demanded.

• The equilibrium price is set by the government, and if the market price is above equilibrium, there will be a shortage.

• The equilibrium quantity is always higher than the equilibrium price, and if the market price is above equilibrium, demand will increase.

• The equilibrium is determined by consumer preferences only, and if the market price is above equilibrium, supply will decrease.

Which of the following best demonstrates strategic thinking when choosing a teen entrepreneur to study?

• Selecting a teen entrepreneur based on their popularity.

• Choosing a teen entrepreneur whose story challenges your assumptions and analyzing what surprised you about their journey.

• Picking a teen entrepreneur at random.

• Selecting a teen entrepreneur because they are from your hometown.

Suppose a new technology reduces the cost of production for a company. Using your understanding of the supply curve and the law of supply, predict and explain how this change would affect the supply curve and the quantity supplied at each price level.

• The supply curve would shift to the right, and the quantity supplied at each price level would increase.

• The supply curve would shift to the left, and the quantity supplied at each price level would decrease.

• The supply curve would become vertical, indicating no change in quantity supplied at any price.

• The supply curve would slope downward, indicating a decrease in supply as price increases.

A company is deciding whether to increase the production of a product after a price increase. The product is easy to produce and resources are cheap and abundant. Using your understanding of elasticity, explain whether the supply of this product is likely to be elastic or inelastic, and justify your reasoning.

• The supply is likely to be elastic because it is easy to produce more and resources are abundant.

• The supply is likely to be inelastic because it is hard to produce more.

• The supply is likely to be inelastic because resources are expensive and scarce.

• The supply is likely to be elastic because it is hard to produce more.

A government introduces a new tax on a key resource used in manufacturing. Using your understanding of supply, explain how this policy change would affect the supply curve and justify your reasoning.

• The supply curve would shift to the right because taxation increases company profits.

• The supply curve would shift to the left because taxation increases production costs, reducing supply.

• The supply curve would not change because taxes do not affect supply.

• The supply curve would shift to the right because taxation encourages more production.

A company discovers a new technology that significantly reduces the cost of producing its product. Using your understanding of supply curves, explain how this change would affect the supply curve and justify your reasoning.

• The supply curve will shift to the right because lower production costs increase supply.

• The supply curve will shift to the left because lower production costs decrease supply.

• The supply curve will not change because production costs do not affect supply.

• The supply curve will become vertical because supply is now fixed.

Strategically assess why mechanization, such as the use of robots or AI, is a preferred method for increasing productivity in modern manufacturing. Consider both the benefits and potential challenges in your reasoning.

• Mechanization increases productivity by automating repetitive tasks, reducing human error, and allowing for faster production, but it may require significant investment and training.

• Mechanization always decreases productivity because machines are slower than humans.

• Mechanization is only used to replace workers, not to improve efficiency.

• Mechanization is preferred because it eliminates the need for any human oversight.

A government is considering two policies: increasing regulations or increasing subsidies for a specific industry. Compare and contrast the likely effects of these two policies on the supply of goods in that industry, using strategic reasoning.

• Both policies will increase supply by reducing costs for producers.

• Increased regulations will increase supply, while increased subsidies will decrease supply.

• Increased regulations will decrease supply, while increased subsidies will increase supply.

• Both policies will decrease supply by increasing costs for producers.

Evaluate the reasoning behind why many big businesses might support the Republican Party’s stance on taxation. Which explanation best aligns with the information provided?

• The Republican Party supports lower taxes, which increases business profits and supply.

• The Republican Party supports higher taxes, which increases business profits.

• The Republican Party supports eliminating all taxes, which has no effect on supply.

• The Republican Party supports higher taxes to reduce competition.

Match each label to the correct part of the graph.

a

b

c

d

e

f

Demand

Quantity

Title of Market

Price

Equilibrium

Supply