Time

How do improvements in technology affect supply?

Improvements in production technology enable firms to increase supply at the current price level.

Fill in the blank: If the price of a commodity remains stable while the price of its substitute rises, producers may opt to produce the ___ goods for higher profits.

Substitute

The supply curve is constructed under which assumption that holds other factors constant?

Ceteris Paribus Assumption

• Holds other factors constant.

• Focus on price changes.

• Essential for supply analysis.

Fill in the blank: A supply schedule illustrates the ___ relationship between price and quantity supplied.

Positive

True or False: The market supply curve represents the total quantity of a commodity that all firms in the market are willing to supply at a single price level.

False

Market supply curve varies by price.

• Reflects price elasticity of supply.

• Shows firm supply at various prices.

• Indicates market response to price changes.

What is the law of diminishing marginal productivity and how does it affect supply decisions?

Law affects supply decisions.

• Diminishing returns increase costs.

• Suppliers need higher prices.

• Affects production quantity decisions.

Fill in the blank: The upward sloping supply curve indicates that as prices increase, the ___ supplied also increases.

Quantity

What happens to the quantity supplied when the price of a commodity rises?

When the price of a commodity rises, sellers are inclined to sell more from their existing stock due to the potential for higher profits.

Fill in the blank: A change in quantity supplied refers to a movement along a specific supply curve due to a change in the ___.

Price of the commodity

True or False: An increase in commodity prices leads producers to decrease production.

False. An increase in commodity prices incentivizes producers to ramp up production in pursuit of higher profits.

What distinguishes a change in supply from a change in quantity supplied?

Supply change differs from quantity change.

• Shift in entire supply curve.

• Movement along the supply curve.

• Caused by non-price factors.

Fill in the blank: For perishable goods, sellers may be willing to sell more units at ___ prices.

Lower

True or False: Socially distinct goods will always see an increase in supply even when prices are high.

False. For socially distinct goods, supply may remain limited even at high prices.