ECON 1010 Lecture 21: Lecture 21
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13 May 2017
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a. State the law of supply.
Ā | Quantity supplied rises as price increases, other things are constant. Quantity supplied falls as price decreases, other things are constant. |
Ā | Supply increases as price falls. Supply decreases as price rises. |
Ā | Supply increases as price increases. Supply decreases as price decreases. |
Ā | Quantity supplied rises as price falls, other things constant. Quantity supplied falls as price increases, other things are constant. |
b. Why is price directly related to quantity supplied?
Ā | As price rises, consumers substitute other goods whose price has not risen. |
Ā | As price rises, suppliers rearrange their activities to supply more of that good to take advantage of the higher price. |
Ā | As price falls, suppliers rearrange their activities to supply more of that good to take advantage of the lower price. |
Ā | As price rises, suppliers rearrange their activities to supply more of a substitute good to take advantage of the higher price. |