Microeconomics Practice Questions: Supply
i, iii, and v
Amul Food Factory in India makes ice cream and produces processed and condensed milk. In the factory, the firm's employees use milk and sugar. The firm runs on electricity and purchases raw milk every day. Large robotic assembly lines fill and package the ice cream containers. Large industrial freezers store the ice cream. Which of the following are variable costs for Amul Food Factory? (i) The cost of the raw milk purchased from farmers. (ii) The cost of buying the robotic assembly lines. (iii) The cost of buying electricity. (iv) The cost of buying industrial freezers. (v) The cost of sugar.
each additional unit of an input adds less to total output than the previous unit
Diminishing marginal product occurs when:
it will increase supply today
If a firm expects lower prices in the future
the supply of pizza will fall
If the price of pepperoni (an ingredient in pizza) increases:
c
Which event shifts the supply curve for mint chocolate chip ice cream to the left? A. a decrease in the price of ice cream B. an increase in income, if ice cream is a normal good C. an increase in the price of cream, an ingredient in ice cream D. a decrease in the price of strawberry ice cream, a substitute for mint chocolate chip ice cream
d
Which factor would cause a DECREASE in the supply of soy candles? A. an increase in the number of firms making soy candles B. an advance in the technology of producing soy candles C. a decrease in employee wages manufacturing soy candles D. expectations that the price of soy candles will rise
d
Which factor would cause a supply curve to shift to the LEFT? A. an increase in the number of firms selling a good B. a technological improvement in the production of a good C. an increase in the price of a good D. an increase in the cost of an input used to produce a good
c
Which factor would cause an INCREASE in the supply of footballs? A. an increase in the price of footballs B. an increase in input prices C. a decrease in the cost of materials used to produce footballs D. expectations that the price of footballs will rise
b
Which factor would cause an INCREASE in the supply of light bulbs? A. a decrease in the number of firms manufacturing light bulbs B. an advance in the technology of producing light bulbs C. an increase in the price of light bulbs D. expectations that the price of light bulbs will rise
increase in supply (shift to the right)
Which graph illustrates what will happen in the market for processed, industrial steel bars when the price of raw steel falls?
increase in supply (shift right)
Which graph shows what will happen in the market for automobiles if there is an advancement in production technology?
quantity supplied goes down the supply curve
Which graph shows what will happen to the supply of roses if the price of roses falls?
supply will decrease (shift to the left)
Which of the following graphs shows what will happen in the market for bread if the price of organic wheat used in bread production rises?
c
Which of the following is NOT a factor that can shift supply? A. the price of a substitute in production B. the expected future price of a product C. the market price of a product D. the price of a complement in production
decrease in supply (shift to the left)
Lenovo produces laptops and desktop computers. Which graph shows what will happen in the market for Lenovo desktops if the demand for laptops increases?
supply will shift to the right (increase)
Microsoft's Project Scarlett Xbox release date is 2020. Which graph shows what will happen to the development and supply of new compatible video games once the Xbox launches in the market?
increase; supply of
Over the past few years, the technology associated with producing flat-screen televisions has improved. This has led to a(n) _____ in the _____ flat-screen televisions.
mow the tenth lawn
Suppose Ben has a part-time business mowing lawns. He has mowed nine lawns on a given day; the price he will receive to mow the tenth lawn is $20, and the marginal cost is $12. Bob should:
vary with the quantity of output produced
Variable costs are the costs that
marginal product is falling but is likely still positive
When a firm experiences diminishing marginal product, its:
supply curve shifts to the right
A coffee shop opens next to an existing coffee shop. Which of the following graphs shows the effect of this new coffee shop on the market supply curve for coffee in this area?
fixed
A cost that does NOT depend on the quantity of output produced is:
it will stock up today and sell the goods when the price rises.
If a seller expects prices to rise in the future
decreases the supply of furniture.
If baseball bats and furniture are substitutes in production, then a rise in the price of baseball bats:
supply will shift left
If expected future profits in an industry fall,
supply of peanut oil will rise
Peanut butter and peanut oil are complements-in-production. When the price of peanut butter rises, the
c
The Mile End Deli serves traditional delicatessen food in Brooklyn, New York. Which cost is MOST likely fixed at the deli? A. the staff B. the rye bread used to make pastrami sandwiches C. the chairs customers sit on D. the tomato sauce used to make soups
decrease in supply (shift left)
There are four gas stations in your town. Which graph shows the effect on the local supply curve for gasoline if one of them shuts down?
the supply of drawing paper will decrease
Paper producers can manufacture both printing and drawing paper. What effect would rising prices for printing paper have on the market for drawing paper?
shift the supply curve for canola oil rightward.
Researchers have found a new strain of canola (a grain used to produce canola oil) that is resistant to pesticides and drought while yielding more canola oil. Holding all else constant, this research will:
decrease in supply (shift to the left)
Stevia is a natural sweetener that is used as a substitute for sugar. Which of the following graphs shows the effect on the supply of bakery desserts made with stevia when the price of stevia rises?
greater than or equal to the marginal cost
The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is:
decrease in supply (shift left)
Tropicana produces both orange juice and lemonade. What will happen to the supply of Tropicana orange juice when the price of lemonade rises in the market and the price of orange juice stays the same?
the supply of truck transportation services will increase
What will the impact be on the supply of long-haul truck transportation services if diesel fuel becomes cheaper?
decreasing the amount of the good or activity as long as the price of one more unit is less than the marginal cost.
When making a profit-maximizing "how much" decision, if the price of a good or service is less than its marginal cost, the individual can make herself better off by: