Chapter 5
supply curve
a graph of the quantity supplied of a good at different prices
market supply curve
a graph of the quantity supplied of a good by all suppliers at different prices
diminishing marginal returns
a level of production in which the marginal product of labor decreases as the number of workers increase
elasticity of supply
a measure of the way quantity supplied reacts to a change in price
operating cost
the cost of operating a facility, such as a store or factory
marginal cost
the cost of producing one more unit of a good
By raising or lowering the cost of producing goods...
the government can encourage or discourage an entrepreneur or an industry within the country or aboard
market supply schedule
a chart that lists how much of a good all suppliers will offer at different prices
fixed cost
a cost that does not change, no matter how much of a good is produced
variable costs
a cost that rises or falls depending on the quantity produced
total cost
fixed costs plus variable costs
Law of Supply
producers offer more of a good as its price increases and less as its price falls
marginal revenue
the additional income from selling one more unit of a good; sometimes equal to price
What is a subsidy, and how do subsidies affect the supply curve?
A subsidy is a government payment that supports a business or market. Subsidies generally lower cost, allowing a firm to produce more goods, increasing the supply and moving the supply curve right.
Variable
A factor that can change
Subsidy
A government payment that supports a business or market
Increasing marginal returns
A level of production in which the marginal product of labor increases as the number of workers increase
Exercise tax
A tax on the production or sale of a good
What is an excise tax, and how do excise taxes affect the supply curve?
An excise tax is a tax on the production or sale of a good. Like any increase in cost and excise tax causes the supply of a good to decrease at all price levels, so the supplies curve shifts to the left.
quantity supplied
the amount a supplier is willing and able to supply at a certain price
What effect do regulations have on the supply curve? Why?
Regulation is government intervention in market that affects the price, quantity, or quality of a good. Regulations that increase the cost of manufacturing something can reduce the supply, which then the supply curve will shift to the left. And vice versa
Supply
The amount of goods available
supply schedule
a chart that lists how much of a good a supplier will offer at different prices
The supplies of imported goods are affected...
by changes in other countries
Regulation
government intervention in a market that affects the production of a good
A rise in the cost of labor or raw materials results in...
higher marginal cost
Advances, such as in technology, can...
lower production costs in many industries
Technology...
lowers costs and increases supply at all price levels
The total supply of a product equals...
the some of imports and domestically produced products
Supplies fall at each price...
the supply curve shifts to the left
Supplies rise at each price...
the supply curve shifts to the right
average cost
the total cost divided by the quantity produced