Supply: the supply curve and what shifts it

Grade 12 Social Studies Worksheet - Building Confidence

Circle the best answer.

1. Read this first

   A smoothie stand's supply (example figures, made up for practice)

   Price of a smoothie	Smoothies supplied a day
   $2	20
   $3	35
   $4	45
   $5	60
   $6	75

   A change in the smoothie's own price moves the stand along its supply curve. A change in anything else, such as the cost of fruit or a fee, shifts the whole curve. Elasticity of supply is the percent change in quantity supplied divided by the percent change in price.

2. 1.

   Bo computes the elasticity of supply for the rise from $4 to $5. Which statement is right?

   • Quantity rises about 33 percent for a 25 percent rise in price, so supply is elastic there
   • Quantity rises 15 for a $1 rise, so supply is inelastic because a dollar is a small change
   • Quantity rises 25 percent for a 33 percent rise in price, so supply is inelastic there
   • Quantity rises 33 percent, so the elasticity of supply is 33 for this price change
3. 2.

   The stand must pay a $1 fee on each smoothie it sells. Jun asks how many it supplies at a $5 price. Which answer fits?

   • 75, since a $1 fee raises the price and so the stand supplies more smoothies
   • 55, halfway between, since the fee is split between the buyer and the stand
   • 45, the amount it supplied at $4 before, since after the $1 fee it keeps just $4
   • 60, since the $1 fee is paid by the buyer and does not touch what the stand offers

4. Apples at a farmers' market (example figures, made up for practice)

   Price per bag	Quantity demanded	Quantity supplied
   $2	100	20
   $3	80	40
   $4	60	60
   $5	40	80
   $6	20	100

   The equilibrium price is the price at which quantity demanded equals quantity supplied. A shift of demand or supply changes the quantity at every price.

5. 3.

   Kira looks at the market when the price is $3. Which statement does the table support?

   • The market is in equilibrium at $3, since both quantities are above zero
   • Buyers want 40 more than sellers offer, so the price tends to fall until buyers leave
   • Buyers want 80 and sellers offer 40, a shortage of 40, and the price tends to rise
   • Sellers offer 80 and buyers want 40, a surplus of 40, and the price tends to rise
6. 4.

   Supply rises by 40 bags at each price. Luz finds the new price and quantity. Which pair is right?

   • $4 and 100 bags: the price stays put and sellers offer 40 more
   • $3 and 40 bags: the new supply does not change how much is sold
   • $3 and 80 bags: at $3 buyers want 80 and sellers now offer 80
   • $5 and 80 bags: more supply raises the price buyers pay
7. 5.

   Demand rises by 40 bags at each price. Milo finds the new price and quantity. Which pair is right?

   • $5 and 40 bags: buyers pay more, so they buy the same amount as before
   • $5 and 80 bags: both the price and the quantity rise
   • $4 and 100 bags: price stays put and the whole 40 extra bags sell
   • $3 and 80 bags: more demand lowers the price, so more bags sell
8. 6.

   A report says the price of apples fell while more bags were sold. Noah decides which curve shifted. Which is best?

   • Supply increased: a demand rise would have raised both the price and the quantity
   • Supply decreased, since a lower price means that fewer sellers stayed in the market
   • Demand increased, since more bags were sold and buyers want more
   • Demand decreased, since the price fell when buyers wanted less of the good

9. Use this

   Card A, "Supply shifters" (in our words). The supply curve shifts when the cost of inputs, technology, the number of sellers, sellers' expectations of future prices, or taxes and subsidies change. A change in the good's own price is a movement along the curve. A change in buyers' incomes shifts demand, not supply. Card B, "Canned beans" (made up). Case 1: the price of steel for cans rises. Case 2: a new canning machine doubles the cans made each hour. Case 3: shoppers' incomes rise. Case 4: canners expect beans to sell for more next month and can store the cans.

10. 7.

    Pia reads cards A and B. Which case raises the supply of canned beans?

    • Case 4: canners expect more next month, so they offer more beans today at each price
    • Case 1: dearer steel makes cans cost more, so canners supply more at each price
    • Case 2: the machine cuts the cost of each can, so canners supply more at each price
    • Case 3: higher incomes mean shoppers buy more, which raises the supply of cans
11. 8.

    Ren reads case 3, where shoppers' incomes rise. Which statement about the curves is right?

    • Neither curve shifts, since an income change affects shoppers but not the market
    • Supply shifts left, since higher incomes mean canners sell the same cans for less
    • Demand shifts right, not supply; supply moves along its curve to the higher price
    • Supply shifts right, since canners earn more when shoppers have more income to spend on beans
12. 9.

    Tala reads case 4. What happens to the supply of canned beans today?

    • Supply increases today, since canners expect to earn more and so make more cans now
    • Nothing changes today, since an expected price is not the price canners get now
    • Supply increases next month alone, since the expected rise happens next month
    • Supply decreases today: canners hold cans back to sell later at the higher price
13. 10.

    A student says any rise in price shifts supply to the right because sellers earn more. Zee checks card A. What is the best reply?

    • Not so: a higher own price moves sellers along the curve; a shift needs another change
    • Right: card A lists the good's own price among the shifters of supply
    • Not so: higher prices cut the quantity sellers offer, which moves the curve left
    • Right: higher prices raise profit, and more profit shifts the whole supply curve to the right