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