Name__________________________________________________Date___________________
1. The law of supply states:
a. There is a positive relationship b/w price and quantity supplied
b. The graph of a supply curve is a downward sloping line
c. People usually supply fewer goods and services when their prices rise
d. People’s behavior in the marketplace is unpredictable
2. When the price of an item changes, producers will usually:
a. Look at how the price change influences the relative value of their alternatives
b. Disregard a small change in price
c. Assume the item is on sale and produce more
d. None of the above
3. Which item will not change (move) the supply curve for a good or service?
a. Expectations
b. Number of sellers
c. Price
d. Change in technology
4. Indicate what will happen to supply (increase or decrease) in the following circumstances:
a. The supply of cars when open-trade agreements bring in new producers –
b. The supply of coffee when freezing temperatures hit the major coffee producing regions
of Brazil and Costa Rica –
c. The supply of lumber when a new computer assisted saw reduces the cost of lumber
production –
d. The supply of gasoline today if there is an expected shortage and higher prices likely to
occur next week
5. Short Essay – Develop an economic rationale for consumer support of trade agreements that
will increase the number of producers for products consumers want. In your rationale, use the
concepts of supply and shifts in supply.