Question

The law of supply shows a positive relationship between price and the quantity that will be supplied, holding all else constant. T OR F

6. If the price of good X increase, then the supply of good X will increase. T OR F

7. If supply increases, the supply curve will shift to the left.

8. Price is on the vertical axis for graphs of supply. T OR F

9. We observe that we have moved from one point on a supply curve to a higher point on a supply curve (up and to the right). From this we can conclude that supply has increased T OR F.

10. We observe that we have moved from one point on a supply curve to a higher point on a supply curve (up and to the right). This was caused by an increase in the price. T OR F

11. Price of X changes from $30 to $33 and the quantity supplied by producers of X does not change at all. From this we can determine that the supply curve (for this range of prices) is horizontal. T OR F

12. Changes in quantity supplied are caused by changes in ceterus paribus assumptions. T OR F

Answer 1

5. True

Explanation: The law of supply states that holding all else constant, quantity supplied increases when price increases and quantity supplied decreases when price decreases.

6.True

Explanation: According to the law of supply states that holding all else constant, quantity supplied increases when price increases and quantity supplied decreases when price decreases.

7.False

Explanation: If supply increases, the supply curve will shift to the right

8. True

Explanation: Price is plotted on the vertical axis and quantity on the horizontal axis.