Question

1.  

Firms are suppliers, but households are never suppliers. T OR F

2.  

A firm produces 200 units of x and puts it in inventory for release at a later date. The current supply of X has increased.

True

False

3.  

Supply curves have a positive slope. T OR F

4.  

Ceterus Paribus assumptions for supply are the variables that are held constant along a supply curve. T OR F

5.  

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.

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.

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

		True
		False

		True
		False

		True
		False

		True
		False

		True
		False

		True
		False

		True
		False

		True
		False

Answer 1

1. Households are the supplier of labor. In case of the labor market households are the suppliers. So the given statement is FALSE.

2. A firm produces 200 unit of good X and puts in inventory so at present the supply of good X will be decreased. So the given statement is FALSE

3. There is a positive relation between supply and price. So the slope of the supply curve is positive. Therefore the given statement is TRUE.

4. Ceteris paribus means holding other things constant. The ceteris paribus assumption is that supply curve relates to price and quantity supplied assuming no other factors changes. The supply curve shows how quantity is changed by changing price, assuming ceteris paribus-no other economically relevant factors are changing. So the given statement is FALSE.