Economic Principles in Action Practice Test

The correct answer identifies consumer income as a factor that does not directly determine supply. Supply focuses on the relationships between the quantity of goods that producers are willing and able to sell at various prices, which is influenced by factors like production costs, the number of sellers in the market, and technological advancements.

Production costs directly affect the supply curve; if costs increase, producers may supply less at any given price. The number of sellers also impacts supply; more sellers in the market typically lead to increased supply as competition stimulates production. Technology influences supply by improving efficiency or reducing production costs, allowing for greater output.

Consumer income, on the other hand, primarily affects demand rather than supply. When consumer income rises, demand for goods often increases because people can afford to buy more. However, this change in demand does not directly affect how much of a product suppliers are willing or able to produce independently. Thus, consumer income stands apart from the factors that directly determine supply.