Econ - Chapter 4 - Supply
increase in returns; diminishing returns; negative returns
3 stages of production
marginal cost per unit
money per person/marginal product
the company's total cost rises by the same amount every time it increases production by one unit
company A can produce a product at a constant marginal cost. this means that _______
total revenue
price x quantity sold
their marginal costs usually drop as production increases
producers usually sell more at higher prices than at lower prices because ____
price effect
producers want to sell more at higher prices than at lower prices
marginal cost
usually rises as the rate of production increases
inelastic supply
exists when the price effect is small
depreciation
a reduction in value of capital goods as a result of use and age
up and to the right
a supply curve shifts ________
offering producers more money in exchange for the product
a supply curve shows that in a market economy consumers get more of a product by
elastic supply
exists when the price effect is substantial
cost of production
expenses a business or producer has in manufacturing goods and services
marginal revenue
extra or additional revenue from the sale of one or more unit of output; most useful measure of revenue; normally starts out high and decreases as production increases which could make them lower their price
total costs
fixed and variable cost sum
fixed cost
full time employees are an example of what type of cost?
little cost
goal of every business person is to produce as much as possible for as _______ as possible
marginal product
the additional productivity which comes from the addition of one or more worker or any other factor of production
break even point
the amount of output a business needs to see in order to cover its total cost
productivity
the cornerstone or foundation of supply
elasticity of supply
the extent to which a change in price causes a change in the quantity supplied
price effect of supply
the higher the price the more will be offered for sale, the lower the price the lower will be offered for sale
increase the input of factors of production; use higher quality factors of production; more skillful use of factors through knowledge, technology, and innovation
3 things that final products are changed by
fixed cost, variable cost, total cost, marginal cost
4 types of cost
weather, strike, expectations, technology, availability of raw materials, number of sellers, cost of production
7 things that causes changes in supply
becomes more elastic because ranchers have more time to bring in resources into cattle production
If the price of beef rises and remains at the higher level, then over time the supply of beef _______
each business would want to sell a smaller quantity at every price shown, so the market supply would shift to the left
Suppose the cost of milk and other ice cream ingredients rise sharply and the marginal cost increases. As a result, _____
The price of water goes up
Which of the following would not shift the supply line of car-washing services to the right?
variable cost
a cost that changes in total amounts with the rate of operation/output; ex: electrical bill
fixed cost
a cost that does not change
fixed cost
a cost which a business has even if the plant is shut down and output is zero; aka overhead; ex: mortgage, rent, property taxes, salary, interest on bonds, depreciation
marginal costs
additional cost incurred by the business when it produces one additional unit; variable cost which results from using additional factors of production to increase output
supplier
anyone who offers an economic product for sale; if you're looking for a job you're offering your service to sell
more
at higher prices producers usually offer ____ than at lower prices
opportunity cost
business people bear this when producing things we want
expectations of higher future prices for a product
can cause today's supply line to shift to the left
technology
causes a change in supply; faster, cheaper, and more efficient; increased the supply of almost all products
weather
causes a change in supply; frost kills crop which makes crop supply decrease, good temperature and rain could make supply go up
cost of production
causes a change in supply; if the cost goes up and price doesn't change, supply goes down; if supply cost goes down, supply goes up
availability of raw materials
causes a change in supply; if we run out we can't produce anymore
expectations
causes a change in supply; if you expect the price to increase soon, supply will decrease today and when the price goes up the supply goes up
number of sellers
causes a change in supply; more sellers = greater supply; less sellers = less supply
strike
causes a change in supply; people refuse to work so nothing is being supplied
more efficient equipment
causes the supply curve to shift to the right
unit elastic
change in price causes proportional change in quantity supplied
theory of production
deals with the relationship between the input of the factors of production and the output of goods and services
suppliers
decide how much to offer for sale by what is best for the individual supplier and cost in producing that good or service
productivity
determines our standard of living
increase in returns
each worker hired contributes more of the total output than each previous worker; workers not able to handle equipment efficiently
variable cost
hourly employees are an example of what type of cost?
growers will offer fewer pumpkins at each and every price
if bad weather destroys much of the halloween pumpkin crop, then
inelastic
if it is costly and time consuming for producers to change resources
right
if marginal cost falls the supply line will shift to the _____
left
if the number of sellers declines the supply line will shift to the _____
marginal cost/marginal revenue
increase production as long as your _______ is lower than your _________
has
incurs means ___
supply line
movement along a ______ refers to the price effect
decrease in supply
people want to sell less of a product at all possible prices
left
shift to the ___ indicates increase in supply
supply schedule
shows price and quantity supplied at all possible prices
inelastic
small change in price causes small change in quantity supplied
elastic
small change in prices causes a big change in the quantity supplied
law of variable proportions
states that as inputs change so do outputs
law of supply
states that the quantity of an economic product offered for sale varies directly with this price
market supply
sum of all producer's supplies
productivity
the rate of output of final products which is the result of an input made up of the factors of production; how much can be produced in a given amount of time
market supply
the sum of all producers' supplies in a given market
supply
the various amounts of something a producer is willing and able to sell at different possible prices
elastic
time passes and producers have a chance to adjust to price change
supply
to business people, this is the quantity of a product which was supplied at the price that prevailed in the market
diminishing return
total output continues to increase but by smaller amounts
negative returns
total output declines to less than zero; labor is wasted
total profit
total revenue minus total costs
an opportunity cost
when something is produced there is always _______
down/up
when the factors of production are used efficiently the cost goes ___ and the supply goes ____