Question

1. The supply curve of an individual producer is based on the expected price in the market. True or False?

2. Producers supply goods and services to the product market. True or False?

3. The supply curve will shift to the right if the cost of factor inputs decrease. True or False?

4. On average, consumers spend the largest portion of their income on food. True/False?

5. A decrease in price leads to a decrease in quantity demanded. True or False?

Answer 1

1) True..... because, The law of supply states that there is a positive relationship between the quantity that suppliers are willing to sell and the price level.

2) True ..... because, product market is any place where finished goods and services are bought and sold.

3) True...... because, Firms use a number of different inputs to produce any kind of good or service. When the price of those inputs increase, the firms face higher production cost. By contrast, a decrease in input price reduces production costs and therefore shifts the supply curve to the right.

4) True..... because, Most consumer spending falls into the larger categories of food, housing, transportation, healthcare, insurance, and other goods and services.

5) False...... because, The law of demand states that a higher price leads to a lower quantity demanded and that a lower price leads to a higher quantity demanded.