Name: ______

Date: ______

Period: _____

Part I:

1. What is supply?

2. What is the law of supply?

3. What gives producers the incentive to produce more? What is the goal of business owners in our economy?

4. How does productivity affect supply?

5. What are subsidies?

Part II: Graph the data from the demand schedule on the area provided.

Price of Boomerangs / Quantity of Boomerangs Supplied
$2 / 2
$4 / 4
$6 / 6
$8 / 8
$10 / 10

Part III: Complete the chart below using the following options

Cost to Produce Amount of Supply Supply Curve Shift

Option #1 Increase Decrease Left (Inward)

OR OR OR

Option #2 Decrease Increase Right (Outward)

Cost to Produce / Amount of Supply / Supply Curve Shifts
Cost of Resources Falls / Decrease / Increase / Right (Outward)
Cost of Resources Rises
Productivity Decreases
Productivity Increases
New Technology
Higher Taxes
Lower Taxes
Government Pays Subsidy

Part IV: The graphs below refer to the same fictional island of Pago-Paga where they make boomerangs. Remember that these graphs refer to SUPPLY of boomerangs. On a separate sheet of paper (or the back of this sheet), redraw the graph below and label each axis for each question. Then sketch the new supply curve based on the statement provided using a different color. Draw arrows to highlight the direction of the shift of the supply curve. Give a short explanation to the right of the graph for why demand changed.

1. The government of Pago-Paga adds a subsidy to boomerang production.

2. Boomerang producers also produce Frisbees. The price of Frisbees goes up.

3. The government of Pago-Paga adds a new tax to boomerang production.

4. Boomerang producers expect an increase in the popularity of boomerangs worldwide.

5. The price of plastic, a major input in boomerang production, increases.

6. Pago-Pagan workers are introduced to coffee as Pago-Paga become integrated into the world market and their productivity increases drastically.