Title: QUIZ: Supply Module (classic)
Course: Recommended Resources for AP Macro from FRE > Section: Unit 1: Basic Economic Concepts

Q: According to the law of supply, if the price of a good or service increases,
- supply will decrease.
- supply will increase.
- quantity supplied will decrease.
- quantity supplied will increase.
A: quantity supplied will increase.
If right: That is correct.
If wrong: That is incorrect. The law of supply says that as the price of a good or service increases, the quantity supplied will increase.

Q:  A decrease in the price of a good would be illustrated on a supply graph as a
- shift of the supply curve to the right.
- shift of the supply curve to the left.
- movement along the supply curve upward.
- movement along the supply curve downward.
A: movement along the supply curve downward.
If right: That is correct.
If wrong: That is incorrect. A decrease in the price of a good or service would cause movement along the supply curve downward.

Q: An improvement in technology used by producers of a certain good will result in
- a decrease in the demand for the good.
- an increase in the demand for the good.
- a decrease in the supply of the good.
- an increase in the supply of the good.
A: an increase in the supply of the good.
If right: That is correct.
If wrong: An improvement in technology would increase the supply of the good being produced.

Q: If the price of one of the resources used to produce a good decreases,
- the demand curve for that good would shift left.
- the demand curve for that good would shift right.
- the supply curve for that good would shift left.
- the supply curve for that good would shift right.
A: the supply curve for that good would shift right.
If right: That is correct.
If wrong: That is incorrect. Lower resource prices would lower overall costs for the firm and increase the supply. An increase in supply is a shift of the supply curve to the right.

Q: In an Effort to Lower the Price of Milk, the Government Provides a Subsidy to Milk Producers.

For the following scenario in the milk market, identify the type and cause of change. Note that these scenarios are asking about producer behavior—supply and quantity supplied.

In this case, the supply curve for milk
- shifts to the right.
- shifts to the left.
- does not shift.
- cannot be determined.
A: shifts to the right.
If right: That is correct.
If wrong: That is incorrect. A government subsidy encourages firms to produce more. This would cause the milk supply curve to shift to the right.

Q: In an effort to lower the price of milk, the government provides a subsidy to milk producers.  In this case, which factor causes the change in the supply of milk?
- A change in the costs of inputs to the production process
- A change in technology
- A change in the number of producers in the market
- Government policies
A: Government policies
If right: That is correct.
If wrong: That is incorrect. A subsidy is an example of a government policy intervening in the market.