Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | subsidy | h. | increasing marginal
returns | b. | supply schedule | i. | diminishing marginal returns | c. | supply curve | j. | marginal revenue | d. | elasticity of
supply | k. | marginal product of
labor | e. | excise tax | l. | marginal cost | f. | law of supply | m. | market supply schedule | g. | variable
cost |
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1.
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the tendency of suppliers to offer more of a good at a higher price
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2.
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a payment to the government on the production or sale of a good
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3.
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a measure of the way a quantity supplied reacts to a change in price
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4.
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a chart that lists how much of a good a supplier will offer at various
prices
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5.
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a government payment that supports a business or market
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6.
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a level of production in which the marginal production decreases with new
investment
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7.
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the cost of producing one more unit of a good
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8.
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a chart that lists how much of a good all suppliers will offer at different
prices
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9.
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the additional income from selling one more unit of a good
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10.
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the change in output from hiring one additional unit of labor
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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11.
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Which of the following is an example of lower production costs brought about by
the use of technology?
a. | the delivery costs of gasoline to the consumer by diesel trucks | b. | the use of e-mail to
replace slower surface mail | c. | the making of breads and pastries in local
shops rather than large bakeries | d. | the importing of fresh vegetables from South
America rather than using canned vegetables |
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12.
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What is the effect of import restrictions on prices?
a. | They cause prices to drop. | b. | They cause prices to rise. | c. | They often cause
prices to rise steeply and then drop. | d. | They usually do not have any lasting effect on
price. |
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13.
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What do sellers do if they expect the price of goods they have for sale to
increase dramatically in the near future?
a. | sell the goods now and try to invest the money instead of
resupplying | b. | sell the goods now but try to get the higher price for them | c. | store the goods
until the price rises | d. | store the goods indefinitely regardless of when
the price rises |
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14.
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Which of the following is the best example of the law of supply?
a. | A sandwich shop increases the number of sandwiches they supply every day when the
price is increased. | b. | A food producer increases the number of acres
of wheat he grows to supply a milling company. | c. | A catering company buys a new dishwasher to
make their work easier. | d. | A milling company builds a new factory to
process flour to export. |
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15.
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Which of the following is an example of a good with an inelastic supply?
a. | beanbags | c. | apples | b. | toothbrushes | d. | hats |
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16.
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Which of the following receives government subsidies that are in place to
protect the population rather than for economic reasons?
a. | a national car company in Indonesia | c. | tobacco growers in the United
States | b. | small farmers in France | d. | national airlines in Western Europe |
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17.
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When the selling price of a good goes up, what is the relationship to the
quantity supplied?
a. | The cost of production goes down. | b. | The profit made on each item goes
down. | c. | It becomes practical to produce more goods. | d. | There is no
relationship between the two. |
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18.
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What factor has the greatest influence on elasticity and inelasticity of
supply?
a. | profit | c. | labor | b. | time | d. | financing |
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Short Answer
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Reading a Chart| Production Costs | | | | | | | | Beanbags
(per hour) | Fixed
cost | Variable
cost | Marginal
cost | Total
revenue | Profit | 0 | $36 | $0 | — | $0 | $-36 | 1 | 36 | 8 | $8 | 24 | -20 | 2 | 36 | 12 | 4 | 48 | 0 | 3 | 36 | 15 | 3 | 72 | 21 | 4 | 36 | 20 | 5 | 96 | 40 | 5 | 36 | 27 | 7 | 120 | 57 | 6 | 36 | 36 | 9 | 144 | 72 | 7 | 36 | 48 | 12 | 168 | 84 | 8 | 36 | 63 | 15 | 192 | 93 | 9 | 36 | 82 | 19 | 216 | 98 | 10 | 36 | 106 | 24 | 240 | 98 | 11 | 36 | 136 | 30 | 264 | 92 | 12 | 36 | 173 | 37 | 288 | 79 | | | | | | |
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19.
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How is the figure for profit arrived at?
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20.
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To achieve the greatest profit, how many beanbags should be made?
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21.
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What is the variable cost for the production of the eleventh bag?
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Essay
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Critical Thinking
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22.
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Formulating Questions What questions should be asked about an excise tax
or government supply regulation to determine its purpose?
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23.
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Making Comparisons What is the difference between a supply schedule and a
market supply schedule?
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24.
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Determining Relevance How is elasticity of supply related to elasticity
of demand?
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