Question

3. Supply: Basic concepts 

Complete the following table by selecting the term that matches each definition. 

• A table showing the relationship between the price of a good and the amount of it that sellers are willing and able to supply at various prices. 

• A graphical object showing the relationship between the price of a good and the amount that sellers are willing and able to supply at various prices. 

• The amount of a good that sellers are willing and able to supply at a given price. 

• The claim that, other things being equal, the quantity supplied of a good increases when the price of that good rises.

Apply your understanding of the previous key terms by completing the following scenario with the appropriate terminology. 

Your professor claims that one of the curves found on the following graph correctly illustrates the supply curve for CDs: 

Because you understand the law of supply, you can deduce that the correct graphical representation of the supply for CDs must be _______ .Moreover, you know that at a price of $10 per CD, the _______  is five million CDs.

Answer 1

Ans:

A table showing the relationship between he price of a good and the amount of it that sellers are willing and able to supply at various prices. - Supply schedule

A graphical object showing the relationship between the price of good and the amount that sellers are willing and able to supply at various prices.- Supply curve

The amount of a good that sellers are willing and able to supply at a given price.- Quantity supplied

The claim that, other things being equal, the quantity supplied of a good increases when the price of that good rises.- Law of Supply

Ans:

The correct graphical representation of the supply for CDs must be S₁ .

Explanation:

According to law of supply, there is a direct relationship between price and quantity supplied of a good . So the supply curve is upward sloping.

Ans:

Moreover , you know that at a price of $10 per CD, the quantity supplied is five million CDs.