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The Law of Supply Directions: Read pages 73-80 in your text and answer the following questions. 1) Define supply- 2) Explain the concept of diminishing returns. 3) Define the law of supply- 4) Using the following supply schedule for CD players to construct a supply curve Price $100 80 60 40 20 Units Supplied 50 40 30 20 10 5) What does a positive sloping supply curve show us? 6) If in question number 4, the price of the factors of production rose, meaning we could not produce our maximum of 50 CD players, but we could only produce 45 CD players. However, we had to leave the prices the same. Which way would the supply curve shift? 7) On the other hand, if our cost of production fell, which way would the line shift? 8) If you were to draw a supply curve and a demand curve for the same product on the same graph, what is the point at which the two lines meet called? 9) What does this point tell us? 10) Define surplus- 11) Define shortage- 12) Using the following demand and supply schedules create a graph that shows their curves. Make sure to label the surplus, the shortage, and point of equilibrium. Price $90 80 70 60 50 # of Scooby Snacks demanded 10 20 30 40 50 # supplied 50 40 30 20 10 Surplus/shortage +40 +20 0 -20 -40