Question

whether each of the following scenarios will increase, decrease, or have no effect on the sup
a \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tcolumn b
____ pencil producers expect an increase in the price of \t\t\t\ta. decrease
pencils in the near future
____ # of pencil producers decreases \t\t\t\t\t\t\t\t\tb. no effect
____ government subsidizes the production of pencils \t\t\t\t\tc. increase
____ price of pencils increase
____ technological innovation lowers the coast of
producing pencils
____ government taxes producers of pencils
wage rates for workers who make pencils
increases

Explanation:

1. Producers will hold supply now to sell later at higher prices, reducing current supply.
2. Fewer producers mean less overall output capacity, lowering supply.
3. Subsidies reduce production costs, encouraging more production.
4. A price increase moves along the supply curve, not shifting the supply itself.
5. Lower production costs let producers make more pencils at each price.
6. Taxes raise production costs, reducing producers' willingness to supply.
7. Higher wages increase production costs, decreasing supply.

Answer:

1. Pencil producers expect an increase in the price of pencils in the near future: a. decrease
2. # of pencil producers decreases: a. decrease
3. Government subsidizes the production of pencils: c. increase
4. Price of pencils increase: b. No effect
5. Technological innovation lowers the cost of producing pencils: c. increase
6. Government taxes producers of pencils: a. decrease
7. Wage rates for workers who make pencils increases: a. decrease