Question

1. according to the law of supply, price and quantity supplied move in direction(s).

supply schedules and supply curves
the law of supply can be represented in numbers using a supply schedule or it can be represented as a graph showing a supply curve.
answer question 5 to illustrate the connection between a supply schedule and a supply curve.

1. simon, an enthusiastic consumer of music downloads, has taken a keen interest in the industry. he has started his own company, simon, inc., which manufactures premium mp3 players. use the supply schedule below to create a supply curve for simons company on the grid shown. label the curve s₁.

supply schedule for simon, inc.
price (dollars) quantity demanded (units)
$100 200
$200 300
$300 400
$400 500
$500 600
$600 700
$700 800
use the graph you created in question 5 to answer questions 6 - 8.

1. the supply curve shows that at a price of $300, simon, inc., will offer to sell ____ premium mp3 players, and at a price of $600, the company will offer to sell ____ premium mp3 players.
2. the companys selling behavior demonstrates the law of ____.
3. the change in production of simon, inc., at different prices is a change in ____.

Explanation:

1. Question 4: According to the law of supply, as price increases, quantity supplied increases and vice - versa. So price and quantity supplied move in the same direction.
2. Question 5: To create the supply curve, plot the price - quantity pairs from the supply schedule on the grid and connect the points. Label the curve $S_1$.
3. Question 6: From the supply schedule, at a price of $300, the quantity supplied is 400 units and at a price of $600, the quantity supplied is 700 units.
4. Question 7: The company's selling behavior follows the law of supply which states that there is a positive relationship between price and quantity supplied.
5. Question 8: The change in production of Simon, Inc. at different prices is a change in quantity supplied.

Answer:

1. The same
2. Plot points from supply schedule and label as $S_1$ (graphical task not shown here)
3. 400; 700
4. Supply
5. Quantity supplied