1. How do the suppliers of milk respond when the price of milk increases?

a. producers will increase supply

b. producers will decrease supply

2. What is the shape of the supply curve?

a. upward sloping

b. downward sloping

3. Just like demand, an increase in supply is always to the (right/left) and a decrease in supply is always to the (right/left).

a. right, left

b. left, right

4. A huge increase in the price of dairy cows, would cause the supply of milk to (increase/decrease)?

a. increase

b. decrease

5. What happens when the number of producers increases?

a. demand increases

b. supply increases

6. New technology will almost always shift supply to the (right/left), by (increasing/decreasing) supply.

a. left, decreasing

b. right, increasing

7. What is a subsidy?

a. When the government charges you to do something.

b. When the government pays you to do something.

8. What happens to the supply curve when the government increases taxes on producers?

a. supply curve will shift to the left

b. supply curve will shift to the right

9. What happens to the supply curve when a producer thinks they can make more profit in the future?

a. the supply curve will shift to the left

b. the supply curve will shift to the right

10. What happens to supply when price increases?

a. supply would decrease

b. supply would increase

c. it stays the same

11. How do you determine the market clearing price and quantity?

a. Analyze the graph to determine where supply and demand meet.

b. determine a nation's production possibilities.

c. the market clearing price is constantly changing and therefore can't be determined

12. What happens in the marketplace whenever the selling price is setabove the market equilibrium price?

a. a surplus

b. a shortage

c. a change in equilibrium

13. What happens in the marketplace whenever the selling price is setbelow the market equilibrium price?

a. a shortage

b. a change in equilibrium

c. a surplus