Civics Chapter 21
Law of Supply
- Producers - Price and quantity - Moves in the same direction
What are 5 factors that causes supply to change?
1) Change in cost of resources 2) Productivity 3) Technology 4) Changes in taxes and subcities 5) Changes in government policy
Shortage
Amount by which the quantity demanded is higher than the quantity supplied
Surplus
Amount by which the quantity supplied is higher than the quantity demanded
Why does the market supply curve upward?
As quality increases prices increases
What is the difference between a price ceiling and a price floor?
Ceiling is the maximum price and Floor is the minimum price
How is market supply determined?
Combines the supply schedules of all the businesses that provide the same good or service
Productivity
Degree to which resources are being used efficiently to produce goods and services
What is the goal of business?
Earn a profit
Subsidy
Government payment to an individual, business, or other group for certain actions
Supply Curve
Graph that shows the amount of a product that would be supplied at all possible prices
How are prices determined in command economy?
Leader-dictator-government -Command Economy- government is in control of what you buy and sell
Supply Elasticity
Measure of how the quantity supplied of a good or service changes in response to changes in price
Technology
Methods or processes used to make goods and services
Profit
Money a business receives for its products or services over and above its cost
Supply Schedule
Numerical chart that illustrates the law of supply
What does a shortage signal to sellers?
Price is too low (surplus- price is high)
Equilibrium Price
Price which the amount producers are willing to supply is equal to the amount consumers are willing to buy
Law of Supply
Principle that suppliers will normally offer more for sale at higher prices and less at lower prices
If the price of a product is above equilibrium price, what is the result?
Surplus (below, shortage)
Market Supply
Total of supply schedules of business that provides the same good or service
Supply
Various quantities of a good or service that producers are willing to sell at all possible market prices
