Chapter 5 Economics

Situation in which suppliers offer different amounts of products for sale at all possible prices

Change in supply

Graph that shows the quantities of a product offered at various prices by all firms that offer the product for sale

Market supply curve

Graph showing the various quantities supplied at all possible prices that might prevail in the market

Supply curve

Measure of the way in which quantity supplied responds to changes in price

Supply elasticity

The supply of a product normally decreases if

Taxes on the product increase.

Production level where total cost equals total revenue

Break-even point

Stage where output increases at a decreasing rate as more units of variable input are added

Diminishing returns

Electronic business or exchange conducted over the Internet

E-commerce

The level of profit-maximizing output is reached when marginal cost is

Equal to marginal revenue

Profits can be maximized when marginal revenue

Equals marginal cost

Total cost is the sum of the

Fixed and variable costs

Cost a business incurs even if there is little or no activity

Fixed cost

Rent payments and property taxes would be counted as

Fixed costs

Many businesses are engaging in e-commerce because

Fixed costs are minimal

The theory of production deals with the relationship between the factors of production and the output of

Goods

Extra cost incurred when a business produces one additional unit of a product

Marginal cost

Principle that suppliers will normally offer more for sale at higher prices and less at lower prices

Law of Supply

Period of production long enough for adjustments in all productive resources

Long run

Total fixed costs

Overhead

Supplied amount of a product that producers bring to market at any given price

Quantity

When producers offer fewer products for sale at each and every price, the supply curve has

Shifted to the left

Period of production so brief that only the variable unputs can be changed

Short run

When the rate of increase in total production is starting to slow down, the firm is operating in

Stage II of production.

Government payment to encourage or protect an economic activity

Subsidy

Amount of a product that would be offered for sale at all possible prices

Supply

A change in the number of sellers offering the product will cause the market ____ to shift

Supply curve

Sum of the fixed and variable costs

Total cost

Total output produced by a firm

Total product

Equals the number of units sold multiplied by the average price per unit

Total revenue

Cost that changes when rate of operation or output changes

Variable cost