Question

1. Which of the following represents the law of supply?

An increase in the price of a good causes a rightward shift of the supply curve for that good.

An increase in the price of a good causes an increase in the supply of that good.

An increase in the price of a good causes an increase in the quantity supplied of that good.

all of the above

2. The quantity supplied of a particular good is the amount of the good that

firms are willing to sell at each price during a particular time period.

households want firms to sell at each price during a particular time period.

households are willing to consume at each particular price.

firms will actually end up buying at a particular price during a given time period.

3. If the price of oranges increases, then there will be ________ of oranges.

an increase in the quantity supplied

an increase in the supply

a decrease in the quantity supplied

a decrease in the supply

4. A shift of the demand curve to the left represents

an increase in quantity demanded.

an increase in demand.

a decrease in quantity demanded.

a decrease in demand.

5. A change in quantity demanded

is a shift of the demand curve.

is caused when there is a change in a ceteris paribus factor.

is a movement along the demand curve.

can be either a shift or a movement along the demand curve.

An increase in price will lead to an increase in quantity supplied. This statement is

untrue always.

the law of demand.

the law of supply.

a normative statement.

Assume that coffee and tea are substitutes, an increase in the price of tea will cause

a leftward shift of the demand curve for tea.

an increase in the demand for coffee.

a leftward shift in the demand for coffee.

a decrease in the demand for coffee.

Answer 1

1. An increase in the price of a good causes an increase in the quantity supplied of that good.  

2. firms are willing to sell at each price during a particular time period.

This is shown through the supply curve where each price tells the quantity of the good that the firm is willing to supply at that price.

3. An increase in the quantity supplied.

This is based on the law of supply.

4. a decrease in demand.

When there is an increase or a decrease in the demand, the demand curve shifts to the right or left respectively.

5. is a movement along the demand curve.

This fact is based on the law of demand curve. Law of demand curve says that a change in the price leads to a change in the quantity demanded. Any change in the quantity demanded due to a price change will lead to a movement along the demand curve.

6. The law of supply