1. Which of the following statements is true about supply? a. There is an invers

Question

1. Which of the following statements is true about supply?

a. There is an inverse relationship between price and quantity supplied.

b. Supply refers to the amount of inventory that sellers have in their warehouses.

c. As price decreases, producers are willing and able to put more of the good on the market for sale.

d. As price increases, producers are willing and able to put more of the good on the market for sale.

2. The table below shows the weekly supply for hamburgers in a market where there are just three sellers.

If there were 200 sellers in the market, each with a supply schedule identical to seller 3 in the table above, then the weekly quantity of hamburgers supplied in the market at a price of $4 would be

a. 800

b. 600

c. 400

d. 200

Explanation / Answer

(1) (d)

Supply function follows the law of supply which states that as price of a good rises (falls), its quantity supplied also rises (falls), so supply curve is upward rising.

(2) (b)

When price is $4, Seller 3 will sell 3 units. So, 200 identical sellers will together sell (200 x 3) = 600 units.

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