Econ 202 Chapter 4: Supply
Suppose your expenses for this term are as follows: tuition: $28,000, room and board: $9,000, books and other educational supplies: $2,500. Further, during the term, you can only work part-time and earn $16,000 instead of your full-time salary of $42,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?
$56,500
The opportunity cost for Will to make an enchilada
0.25
The opportunity cost for Bree to make a taco is
0.5
The opportunity cost for Justin to make a pair of pants is
0.5
The price elasticity of supply for umbrellas is 2. Suppose you're told that following a price increase, quantity supplied increased by 30 percent. What was the percentage change in price that brought this about?
15%
An increase in the price of pineapples will result in
a larger quantity of pineapples supplied.
A decrease in the price of GPS systems will result in
a smaller quantity of GPS systems supplied.
An outward shift of a nation's production possibilities frontier represents
economic growth
If, for a given percentage increase in price, quantity supplied increases by a proportionately larger percentage, then supply is
elastic
Price elasticity of supply is used to gauge
how responsive suppliers are to price changes.
A supply schedule
is a table that shows the relationship between the price of a product and the quantity of the product supplied.
If firms do not increase their quantity supplied when price changes, then supply is
perfectly inelastic
The price elasticity of an upward-sloping supply curve is always
positive
If, for a given percentage decrease in price, quantity supplied decreases by a proportionately smaller percentage, then supply is
relatively inelastic
The supply curve for watches
shows the relationship between the price of watches and the quantity of watches supplied.
Over longer periods of time, increases in oil prices provide firms with incentives to explore and recover oil. What does this indicate about the long-run price elasticity of supply for oil?
The elasticity coefficient is likely to be higher in the long run than in the short run.
Bringing oil to the market is a relatively long and costly process. The whole process from exploration to pumping significant amounts of oil can take years. What does this indicate about the price elasticity of supply for oil?
The elasticity coefficient is likely to be low and supply is highly inelastic.
The price elasticity of supply is equal to
the percentage change in quantity supplied divided by the percentage change in price
What is the difference between an "increase in supply" and an "increase in quantity supplied"?
An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.
All else equal, as the price of a product falls, the quantity supplied increases.
False
Refer to Figure 6-10. The supply curve on which price elasticity changes at every point is shown in
Panel D (steeper)
In October 2005, the U.S. Fish and Wildlife Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea. What happened in the market for caviar in the United States?
The supply curve shifted to the left.
If the United States placed an embargo on Swedish products, what would happen in the U.S. market for Swedish furniture?
The supply curve would shift to the left.
Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals. How is the market for pool maintenance services affected by this?
There is a decrease in the supply of pool maintenance services.
Harvey Rabbitt pays for monthly cable TV service. Last week the cable company informed Harvey that his monthly cable price would go down because the city council has granted approval for three new cable companies to service his area. How is the market for cable TV services affected by this?
There is an increase in the supply of cable TV service.
Will has
a comparative advantage and an absolute advantage in making enchiladas.
Product & Production per week: Producer Shirts Pants Dylan 12 9 Justin 4 8 16 17 Dylan has a
a comparative advantage and an absolute advantage in making shirts.
Bree has
a comparative advantage and an absolute advantage in making tacos.
Production per day (Bushels): Pickers Apples Cherries Taylor 8 2 Jeff 6 3 14 5 Taylor has
a comparative advantage and an absolute advantage in picking apples.
Jeff has
a comparative advantage and an absolute advantage in picking cherries.
An increase in the price of off-road vehicles will result in
a larger quantity of off-road vehicles supplied.
One would speak of a change in the quantity of a good supplied, rather than a change in supply, if
the price of the good changes.
Product & Production per hour: Tacos Enchiladas Bree 12 6 Will 4 16 total 16 22 The producer with the least opportunity cost of making a taco is
the producer who gives up the fewest enchiladas to make a taco.
The producer with the least opportunity cost of making a shirt is
the producer who gives up the fewest pants to make a shirt.
If, in the market for oranges, the supply has increased then
the supply curve for oranges has shifted to the right.
If in the market for peaches the supply curve has shifted to the left,
the supply of peaches has decreased.
An increase in the quantity of a product supplied is caused by an increase in the price of the product.
true
Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.
true
The points outside the production possibilities frontier are
unattainable