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Supply Review

Supply Review. Ch. 5 Sections 1&3. What is….?. The Law of Supply. Answer. As prices increase, supply increases As prices decrease, supply decreases. Elastic or Inelastic??. The price of apples increases. Answer.

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Supply Review

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  1. Supply Review Ch. 5 Sections 1&3

  2. What is….? The Law of Supply

  3. Answer As prices increase, supply increases As prices decrease, supply decreases

  4. Elastic or Inelastic?? The price of apples increases

  5. Answer Supply is inelastic. An apple grower could not increase the supply greatly in the short term

  6. Elastic or Inelastic? The price of an oil change increases

  7. Answer Supply is elastic. A repair shop could hire more workers and increase the supply

  8. Elastic or Inelastic?? The price of dry cleaning services increases.

  9. Answer Supply is elastic. A dry cleaner could hire more workers and increase the supply

  10. Elastic or Inelastic?? The price of tickets to a football game increases.

  11. Answer Supply is inelastic. Stadium owners cannot increase the supply of seats greatly in the short term

  12. What is the effect on supply? The price of steel goes up for my car manufacturing plant

  13. Answer Input Costs – decrease my supply

  14. What is the effect on supply? I receive a government subsidy to plant corn in my field

  15. Answer Subsidy – increases my supply of corn

  16. What is the effect on supply?? Government regulation says that I must re-build my factory to emit less carbon dioxide

  17. Answer Regulations – decrease my supply

  18. What is the effect on supply? I must pay a tax on each gallon of whiskey I make

  19. Answer Excise Tax – will decrease my supply

  20. What is the effect on supply? Prices for wheat are expected to rise next month

  21. Answer Future Expectation – I will hold on to my wheat until prices rise causing a decrease in my supply now but an increase when prices rise

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