ECON 2303 LC3 CH.3: Supply: Thinking Like a Seller

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If an oil refinery can supply 2 million gallons per week when the price is $3 per gallon, what will be the market quantity supply for 10 refineries having the same supply decisions?

20 million gallons

The Rational Rule for Sellers is important but does NOT:

tell sellers how to set the price against the competitors.

The tendency for quantity supplied to be higher when the price is higher is called:

the law of supply

The supply curve is upward-sloping because:

the marginal cost curve is upward-sloping.

If all individual supply curves don't shift aftera price change, the market supply

will not shift

The answer to the question, "Should I produce one more unit?" depends on the balance of _____ and _____.

marginal benefits; marginal costs

In a(n) _____, all firms sell an identical good and there are a lot of buyers and sellers whose sizes are relatively small compared to the size of the market.

perfectly competitive market

When existing businesses leave the market, they _____ the total quantity supplied at each price, shifting the supply curve to _____.

decrease; the left

If the price of gas is $1 per gallon, how many gallons will be supplied per week?

10 million gallons

If the price of gas increases from $1 to $5, the quantity of gas supplied per week would change from _____ gallons to _____gallons.

10 million; 30 million

If the price of gas is $2 per gallon, how many gallons would be supplied per week?

15 million gallons

If the price of gas is $4 per gallon, how many gallons would be supplied per week? 25

25 million gallons

If the price of gas falls from $4 to $2, the quantity of gas supplied per week would change from _____ gallons to _____ gallons.

25 million; 15 million

_____ are goods that are made together.

Complements-in-production

When you change the quantity of output you produce, _____ costs will not vary with the units of outputs.

Fixed

Your _____ is also your marginal cost curve, and so anything that will change your marginal costs will shift your _____.

Decrease ; shift to the left

_____ are alternative uses of your production capacity.

Substitutes-in-production

Substitutes-in-production are:

alternative uses of your production capacity.

The interdependence principle reminds you that your best choice as a seller:

depends on many other factors beyond price.

A shift in the supply curve is a:

movement of the supply curve itself.

When following the Rational Rule for Sellers in Competitive Markets, it is NOT true that:

your supply curve is downward-sloping because of rising marginal costs.

To distinguish between movements along a supply curve and shifts in supply curves, if market conditions other than price change, you need to think about:

shifts in the supply curve.

When your suppliers increase the prices of your inputs, they increase your _____, and this will shift your supply curve to _____.

marginal costs; the left

An individual supply curve is a graph plotting the:

quantity of an item that a business plans to sell at each price.

Your _____ is also your marginal cost curve, and so anything that will change your marginal costs will shift your _____.

supply curve; supply curve

A shift of the supply curve to the right means that there is:

will shift also.

When market conditions change, each firm responds by changing its supply. When all individual supply curves shift, the market supply curve:

will shift also.


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