1. Arrow up or down: According to the law of supply, an increase in price ___ the quantity supplied.
2. From the following list, choose the variables that are held fixed when drawing a market supply curve:
The price of the product
Wages paid to workers
The price of materials used in production
Taxes paid by producers
The quantity of the product purchased
3. The minimum supply price is the ____ price at which a product is supplied.
4. The market supply curve is the ___ (horizontal/vertical) sum of the individual supply curves.
5. A change in price causes movement along a supply curve and a change in _____.
6. Marginal Cost of Housing. When the price of a standard three-bedroom house increases from $150,000 to $160,000, a building company increases its output from 20 houses per year to 21 houses per year. What does the increase in the quantity of housing reveal about the cost of producing housing?
7. Imports and Market Supply. Two nations supply sugar to the world market. Lowland has a minimum supply price of 10 cents per pound, while Highland has a minimum supply price of 24 cents per pound. For each nation, the slope of the supply curve is 1 cent per million pounds.
a. Draw the individual supply curves and the market supply curve. At what price and quantity is the supply curve kinked?
b. The market quantity supplied at a price of 15 cents is ____ million pounds. The market quantity supplied at a price of 30 cents is ___ million pounds.
8. Responses to Higher Soybean Prices. Suppose that in initial equilibrium in the soybean market, each of the 1,000 farmers produces 50 units, for a total of 50,000 units of soybeans. Suppose the price of soybeans increases, and everyone expects the price to stay at the higher level for many years.
a. Arrows up or down: Over a period of several years, we expect the quantity of soybeans supplied to ____ as the number of soybean farmers____ and the output per farmer ______.
b. A farmer who enters the market is likely to have a ______ (higher/lower) marginal cost of production than an original firm.