Economics- Chapter 5
Long Run
A period of production long enough for producers to adjust the quantities of all their resources
Short Run
A period of production that allows producers to only change a variable input (labor)
Law of Supply
A principle that states suppliers will normally offer more for sale at higher prices and less at lower prices
Subsidy
Government payment to encourage or protect an economic activity
Supply Curve
Graph showing the various quantities supplied at each and every price
Diminishing Returns
In production, this principle is where the output increases at a declining rate as more units of a variable input are added
Quantity Supplied
Amount of a product that producers bring to the market at any given price
Supply
Amount of a product that would be offered for sale at all possible prices
Total Product
Another term for total output produced by a firm
Supply is defined as the amount of a product that would be offered for sale
Define supply
The Law of Supply is the principle that suppliers will normally offer more for sale at high prices and less at lower prices
Explain the Law of Supply
An individual supply curve is a graph showing the various quantities supplied at each and every price by one firm A market supply curve is the supply curve that shows the quantities offered at carious prices by all firms
Explain the difference between the individual supply curve and the market supply curve
Total cost of production is the sum of the fixed and variable costs Marginal cost is the extra cost incurred when a business produces one additional unit of a product
Explain the difference between total cost and marginal cost
Total Revenue
It is the number of units sold multiplied by the average price per unit
Cost of Inputs Productivity Technology Taxes and Subsidies Expectations Government Regulations Number of Sellers
List the 7 factors that cause a change in supply
Raw Materials
Refers to unprocessed natural products used in production
Marginal Cost
The extra cost incurred when a business produces one additional unit of a product
Marginal Product
The extra output or change in total output caused by the addition of one more unit of variable input
Total Cost
The sum of fixed costs and variable costs
Break-Even Point
The term used to describe the point at which the total output or total product a business needs to sell in order to cover its total cost
Change in Quantity Supplied
This occurs when there is a change in the amount offered for sale in response to change in price
Fixed Cost
Type of cost that a business incurs even if the plant is idle and output is zero
Variable Cost
Type of cost that changes when the business rate of operation or output changes
Market
Type of supply curve that shows various quantities supplied at each and every price by all firms
Individual
Type of supply curve that shows various quantities supplied at each and every price by one firm