Economics terms 3

variable costs

costs that vary with the quantity of output produced

market supply curve

a graph of the quantity supplied of a good by all suppliers at different prices

supply curve

a graph of the relationship between the price of a good and the quantity supplied

elasticity of supply

a measure of the way quantity supplied reacts to a change in price

supply schedule

a table that shows the relationship between the price of a good and the quantity supplied

total cost

fixed costs plus variable costs

marginal cost

the cost of producing one more unit of a good

marginal product

the increase in output that arises from an additional unit of input

Why might an increase in oil prices lead to a decrease in the supply of fruits and vegetables in your local supermarket?

An increase in oil prices would translate to an increase to shipping costs - another input cost.

Why does the marginal cost in janines factory decrease as marginal product increases?

Both show he quantity affected by price

How is the law of supply similar to the law of demand?

Both show he quantity affected by price.

fixed costs

Costs that do not vary with the quantity of output produced

Law of Supply

Tendency of suppliers to offer more of a good at a higher price

What else besides raw materials would be included in input costs?

The cost of labor, power, and machinery.

How does a business use marginal analysis to decide how many workers to employ?

The ease at which a producer can change production to respond to price changes is the main factor that affects supply. Producers that can respond more easily and quickly will have more elastic supply than producers that have a difficult time responding to price changes.

If price of a video game increased what would the law of supply predict about the quantity supplied of the game?

The manufacturer would be willing to supply more games to the market.

Why do excise taxes and subsidies affect supply differently?

They increase producer's costs and therefore decrease supply; while subsidies decrease producers costs and increase supply.

Does expectation of a change in price affect supply?

Yes, examples show that an expectation of an increase in price causes an increase in supply; while expectation of a decrease of price causes a decrease in supply.