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ModULE 1.5
                    5.  A technological advance in textbook production will   7.  Starch from the stalks of potato plants is used to
                       lead to which of the following?                     make packing peanuts, a complement in production.
                         a. a decrease in textbook supply                  A decrease in potato demand that lowers potato prices
                        b. an increase in textbook demand                  will cause which of the following in the packing-peanut
                         c. an increase in textbook supply                 market?
                        d. a movement along the supply curve for textbooks    a. an increase in supply and no change in demand
                         e. an increase in textbook prices                  b. an increase in supply and a decrease in demand
                    6.  Expectations among hiking-boot makers that boot      c. a decrease in both demand and supply
                       prices will rise significantly in the future will lead to    d. a decrease in supply and no change in demand
                       which of the following now?                           e. a decrease in supply and an increase in demand
                         a. an increase in boot supply
                        b. no change in boot supply
                         c. a decrease in boot supply
                        d. a movement to the left along the boot supply curve
                         e. a movement to the right along the boot supply curve


                                        ®
                      Tackle the AP  Test: Free-Response Questions


                    1.  Tesla Motors makes sports cars powered by lithium
                       batteries.                                         Rubric for FRQ 1 (5 points)
                         a. Draw a correctly labeled graph showing a            Price
                          hypothetical supply curve for Tesla sports cars.
                        b. On the same graph, show the effect of a major new
                          discovery of lithium that lowers the price of lithium.
                          Explain.
                         c. Suppose Tesla Motors expects to be able to sell its
                          cars for a higher price next month. Explain the effect
                          that will have on the supply of Tesla cars this month.        S           S
                                 ®
                    2.  Suppose AP  Economics students at your school offer              1           2
                       tutoring services to students in regular economics                                Quantity of cars
                       courses.                                           1 point: Graph with “Price” or “P” on the vertical axis and
                         a. Draw a correctly labeled graph showing the supply   “Quantity” or “Q” on the horizontal axis
                          curve for tutoring services measured in hours. Label   1 point: A positively sloped curve labeled “Supply” or “S”
                          the supply curve “S .”
                                         1
                        b. Suppose the wage paid for babysitting, an alternative   1 point: A second supply curve shown to the right of the
                                                                          original supply curve with a label such as  2 S , indicating that
                                     ®
                          activity for AP  Economics students, increases.   it is the new supply curve
                          Explain how the wage increase affects the supply of   1 point: Lithium is an input into the production of Tesla
                          tutoring. Show the effect of this wage increase on   cars. A decrease in the price of lithium will increase the sup-
                          the graph you drew for part a. Label the new supply   ply of Tesla cars.
                          curve “S .”
                                2
                                                          ®
                         c. Suppose instead that the number of AP  Economics   1 point: Correct explanation that the expectation of higher
                                                                          prices next month would lead to a decrease in the supply
                          students increases. Explain how the change in the   of Tesla cars this month because the company will want to
                                     ®
                          number of AP  Economics students affects the    sell more of its cars when the price is higher
                          supply of tutoring. Show the effect of this increase in
                            ®
                          AP  Economics students on the same graph you
                          drew for parts a and b. Label the new supply curve
                          “S .” (5 points)
                           3








                                                                                                   Module 1.5  Review  45
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