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Supply of Services

Description: This quiz aims to test your understanding of the concept of supply of services in economics.
Number of Questions: 14
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Tags: economics service economics supply of services
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What is the primary factor that determines the supply of services?

  1. Cost of production

  2. Availability of resources

  3. Demand for services

  4. Government regulations

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Correct Option: B
Explanation:

The supply of services is primarily determined by the availability of resources, such as labor, capital, and technology, that are required to produce those services.

How does an increase in demand for a service affect its supply?

  1. It increases the supply of the service.

  2. It decreases the supply of the service.

  3. It has no effect on the supply of the service.

  4. It depends on the elasticity of supply.

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Correct Option: D
Explanation:

The effect of an increase in demand on the supply of a service depends on the elasticity of supply. If the supply is elastic, an increase in demand will lead to an increase in supply. If the supply is inelastic, an increase in demand will have little or no effect on the supply.

What is the difference between a fixed supply and an elastic supply?

  1. A fixed supply is constant, while an elastic supply can change.

  2. A fixed supply is inelastic, while an elastic supply is responsive to changes in demand.

  3. A fixed supply is determined by the availability of resources, while an elastic supply is determined by the cost of production.

  4. A fixed supply is typically found in the short run, while an elastic supply is typically found in the long run.

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Correct Option: B
Explanation:

A fixed supply is inelastic, meaning that it does not respond to changes in demand. An elastic supply is responsive to changes in demand, meaning that it can increase or decrease in response to changes in demand.

How does a technological advancement affect the supply of a service?

  1. It increases the supply of the service.

  2. It decreases the supply of the service.

  3. It has no effect on the supply of the service.

  4. It depends on the elasticity of demand.

Show answer
Correct Option: A
Explanation:

A technological advancement typically leads to an increase in the supply of a service, as it allows for more efficient production methods and lower costs.

What is the role of government regulations in the supply of services?

  1. Government regulations can increase the supply of services.

  2. Government regulations can decrease the supply of services.

  3. Government regulations have no effect on the supply of services.

  4. The effect of government regulations on the supply of services depends on the specific regulations.

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Correct Option: D
Explanation:

Government regulations can have a variety of effects on the supply of services, depending on the specific regulations. For example, regulations that impose high costs on businesses can decrease the supply of services, while regulations that provide subsidies or other forms of support can increase the supply of services.

Which of the following is an example of a service?

  1. Manufacturing a car

  2. Providing medical care

  3. Growing crops

  4. Mining coal

Show answer
Correct Option: B
Explanation:

Providing medical care is an example of a service, as it involves the provision of intangible benefits to consumers.

What is the relationship between the supply of services and the price of services?

  1. The supply of services is directly proportional to the price of services.

  2. The supply of services is inversely proportional to the price of services.

  3. The supply of services is unrelated to the price of services.

  4. The relationship between the supply of services and the price of services depends on the elasticity of supply.

Show answer
Correct Option: D
Explanation:

The relationship between the supply of services and the price of services depends on the elasticity of supply. If the supply is elastic, an increase in price will lead to a larger increase in supply. If the supply is inelastic, an increase in price will have little or no effect on the supply.

What is the difference between a positive externality and a negative externality?

  1. A positive externality benefits others, while a negative externality harms others.

  2. A positive externality increases the supply of a service, while a negative externality decreases the supply of a service.

  3. A positive externality is caused by government regulations, while a negative externality is caused by market failures.

  4. A positive externality is typically found in the short run, while a negative externality is typically found in the long run.

Show answer
Correct Option: A
Explanation:

A positive externality is a benefit that is enjoyed by someone other than the person who created it. A negative externality is a cost that is imposed on someone other than the person who created it.

How can government policies affect the supply of services?

  1. Government policies can increase the supply of services.

  2. Government policies can decrease the supply of services.

  3. Government policies have no effect on the supply of services.

  4. The effect of government policies on the supply of services depends on the specific policies.

Show answer
Correct Option: D
Explanation:

Government policies can have a variety of effects on the supply of services, depending on the specific policies. For example, policies that provide subsidies or other forms of support can increase the supply of services, while policies that impose high costs on businesses can decrease the supply of services.

What is the role of competition in the supply of services?

  1. Competition can increase the supply of services.

  2. Competition can decrease the supply of services.

  3. Competition has no effect on the supply of services.

  4. The effect of competition on the supply of services depends on the specific market structure.

Show answer
Correct Option: D
Explanation:

The effect of competition on the supply of services depends on the specific market structure. In a perfectly competitive market, competition can lead to an increase in the supply of services. In a monopoly market, competition has no effect on the supply of services.

What is the difference between a private good and a public good?

  1. A private good is excludable, while a public good is non-excludable.

  2. A private good is rivalrous, while a public good is non-rivalrous.

  3. A private good is provided by the government, while a public good is provided by the private sector.

  4. A private good is typically found in the short run, while a public good is typically found in the long run.

Show answer
Correct Option: A
Explanation:

A private good is a good that can be excluded from consumption by those who do not pay for it. A public good is a good that cannot be excluded from consumption by those who do not pay for it.

How can technological advancements affect the supply of services?

  1. Technological advancements can increase the supply of services.

  2. Technological advancements can decrease the supply of services.

  3. Technological advancements have no effect on the supply of services.

  4. The effect of technological advancements on the supply of services depends on the specific technology.

Show answer
Correct Option: A
Explanation:

Technological advancements can lead to an increase in the supply of services by making production more efficient and reducing costs.

What is the role of education and training in the supply of services?

  1. Education and training can increase the supply of services.

  2. Education and training can decrease the supply of services.

  3. Education and training have no effect on the supply of services.

  4. The effect of education and training on the supply of services depends on the specific industry.

Show answer
Correct Option: A
Explanation:

Education and training can increase the supply of services by providing workers with the skills and knowledge they need to produce services.

How can government policies affect the demand for services?

  1. Government policies can increase the demand for services.

  2. Government policies can decrease the demand for services.

  3. Government policies have no effect on the demand for services.

  4. The effect of government policies on the demand for services depends on the specific policies.

Show answer
Correct Option: D
Explanation:

Government policies can have a variety of effects on the demand for services, depending on the specific policies. For example, policies that provide subsidies or other forms of support can increase the demand for services, while policies that impose high costs on consumers can decrease the demand for services.

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