6. What would cause the supply curve for an agricultural product to shift to the right?
A. An increase in the costs of production
B. An increase in the price of substitutes
C. An increase in the price of the good
D. An increase in the productivity of farms
7. What would increase the price elasticity of supply (PES) of a product?
A. An increase in the cost of inputs
B. An increase in the firm's profits
C. An increase in the number of close substitutes
D. An increase in the time a product can be stored
8. The diagram shows a demand curve.
price
P₂
Y
X
P₁
O Q₂ Q₁ D
quantity
What does the movement from X to Y show?
A. A decrease in quantity demanded due to an increase in price
B. A decrease in quantity demanded due to changes in the conditions of demand
C. An increase in quantity demanded due to changes in the conditions of demand
D. An increase in quantity demanded due to an increase in price
9. In a market there is a surplus of a good.
Which change would cause the market to come to an equilibrium?
A. A decrease in demand
B. A fall in price
C. A rise in price
D. An increase in supply
Answer (2)
To determine what would cause the supply curve for an agricultural product to shift to the right, we need to understand the factors that can increase supply. The supply curve shifts to the right when there is an increase in supply.
Option D: An increase in the productivity of farms is the correct choice. When farms become more productive, they can produce more output with the same amount of resources, leading to an increased supply of the agricultural product. Therefore, the supply curve shifts to the right.
The price elasticity of supply (PES) measures how much the quantity supplied of a good changes in response to a change in its price. A higher PES means the supply is more responsive to price changes.
Option D: An increase in the time a product can be stored is correct. When a product can be stored for a longer time, producers have more flexibility to respond to price changes without having to worry about the product spoiling or going to waste. This makes the supply more elastic.
The movement from X to Y on the demand curve reflects changes along the curve, which occur due to price changes.
Option A: A decrease in quantity demanded due to an increase in price is the correct choice. As price increases from P 1 to P 2 , the quantity demanded decreases from Q 1 to Q 2 , moving from point X to point Y along the demand curve.
To bring a market with a surplus of a good back to equilibrium, the quantity supplied needs to be reduced or the quantity demanded needs to be increased.
Option B: A fall in price is the correct choice. When there is a surplus, the price will typically fall because the quantity supplied exceeds the quantity demanded at the current price. As the price falls, the quantity demanded increases and the quantity supplied decreases, moving the market towards equilibrium.
To summarize, the supply curve for an agricultural product shifts to the right due to increased farm productivity. The price elasticity of supply increases when products can be stored longer, affecting how quickly supply can respond to price changes. Lastly, a market surplus can return to equilibrium through a fall in price, increasing demand and adjusting supply accordingly.
;
