Section 3: Supply and Elasticity of Supply

Question 1

Supply can be defined as

Answer 1

the total quantity of a g/s that suppliers wish to produce an offer for sale at a particular price in a given time period

Question 2

An individual firm’s supply curve shows

Answer 2

how each producer is willing to change the QS in response to changes in the price of the good

Question 3

Describe the firm’s supply curve

Answer 3

it is upward sloping because of the positive relation between price and QD. this means that an increase in the price of the good results in an increase in the QS, and a decrease in the P of the good results in a decrease in the QS

Question 4

Movements along the supply curve are brought out by a

Answer 4

change in the price of the g/s

Question 5

An increase in the price of the good leads to an increase in the QD shown by

Answer 5

an upward movement along the SC termed an extension in supply

Question 6

Conversely, a decrease in the P of the good leads to a decrease in the QS shown by

Answer 6

a downward movement along the SC termed a contraction in supply

Question 7

Shifts of the SC are caused by

Answer 7

changes in non-price factors

Question 8

(shifts)An increase in the supply of a good is shown by

Answer 8

an outward shift of the SC, while a decrease= inwards

Question 9

An outward shift of the SC means an …
An inward shift of the SC means…

Answer 9

increase in supply at all price levels
a decrease in supply at all price levels