Understanding Market Supply and Factors Affecting it Quiz

Number of buyers does not directly affect market supply as it is a determinant of demand.

An increase in production costs leads to a decrease in market supply.

A decrease in marginal cost leads to an increase in supply, following the law of supply.

In the short run, the primary objective of a firm is to maximize profits.

The cost of raw materials used in production is an example of a variable cost for a firm.

Ceteris paribus means holding all other factors constant, focusing on the impact of a specific variable.

The number of firms in the industry is a determinant of market supply.

The law of supply states that as the price of a good or service increases, the quantity supplied by producers increases.

Quantity supplied changes in response to price, while changes in supply result from factors other than price.

High elasticity indicates that quantity supplied is highly responsive to price changes.

Expectations of future prices can either increase or decrease market supply, depending on whether they are positive or negative.

Producer surplus is the difference between the minimum price a producer is willing to accept for a good and the actual price received.

A decrease in production costs leads to an increase in supply, causing a rightward shift in the supply curve.

Price level is not a determinant of price elasticity of supply; other factors like production technology and time horizon play a role.

In perfect competition, supply is perfectly elastic, meaning producers can sell any quantity at the market price.

The number of firms in the industry is a long-run determinant of market supply.

Economies of scale occur when increasing production leads to a decrease in average total cost.

In the long run, supply is more elastic as producers can adjust production levels and inputs.