Using the SPENT factors, discuss things that might shift the supply curve for bags of roasted coffee. Give one example for each factor.
What will be an ideal response?
Should show a thorough understanding of the effect of the SPENT factors on supply. For input prices, an increase in the cost of harvesting coffee will cause producers to supply fewer bags of roasted coffee, and the curve will shift left. If the price of a related production good such as instant coffee falls, producers will supply more of the more profitable roasted coffee, and the curve will shift right. If producers expect roasted coffee’s price to drop in the future, they will likely supply more of it now when prices are higher, and the curve will shift right. If roasted coffee producers drop out of the market, the supply will decrease and the curve will shift left. Finally, if coffee roasting technology becomes more efficient, production costs will go down, and producers will be willing to increase their supply, shifting the curve right.
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When an individual is frictionally unemployed, the unemployment arises in part from
A) a short-term elimination of jobs because of a slowdown in business activity. B) individuals searching for appropriate employment. C) the permanent elimination of jobs because of a change in the structure of the economy. D) a reduction in the overall demand for workers' skills.
The composition of demand and supply is relatively unimportant to the study of inflation and unemployment rates.
Answer the following statement true (T) or false (F)
A temporary decrease in the price of oil would be considered a:
A. long-run supply shock. B. demand shock. C. short-run supply shock. D. The changing price of oil would not affect any of these.
What do the income effect, the substitution effect, and diminishing marginal utility have in common?
A. All are required to explain the utility-maximizing position of a consumer. B. They are all empirically measurable. C. They all help explain the upsloping supply curve. D. They all help explain the downsloping demand curve.