Download The Law of Supply - The Big L | James 1:2-4

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