AGEC1041

Non-price determinants of supply

(shifters) expectations of sellers on prices, income, etc., technology changes, prices of alternative/complementary products

22) Suppose the current price of barley is $7 per bushel and at that price 100,000 bushels are grown by a Colorado farmer. If the price of barley rises to $8 and quantity supplied increases to 130,000 bushels, then using the midpoint method, the price elasticity of supply for barley equals

1.96

In the figure above, at the market price of $15, the consumer surplus equals

10,000

20) Kevin owns a agribusiness consulting firm in California. The above figure shows the demand and cost curves for his firm. To maximize profits, Kevin will serve ________ clients per day, charge a price equal to __________, face ___________ average cost, and achieve ______________ in profits?

4, $60, $40, $80

The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total cost of producing 50 bikes?

400

Kenya owns a lawn mowing company. His total product schedule is in the above table. The marginal product of the fourth worker is ________ lawns mowed per week.

5

Shut-down point:

ABC average variable cost and price (price has be enough to cover per unit cost -- if can't, company has to shut down)

During the short-run period of the production process, a firm will be:

Able to vary some factors of production

Economic Profits:

All the accounting stuff, opportunity cost

A firm producing at equilibrium, intersection of demand and supply and minimum of AVC, achieves

Allocative & Production Efficiency

In the above figure, the movement from point a to point b reflects

An increase in the price of pizza

An increase in the number of pineapple growers results in

An increase in the supply of pineapples and a rightward shift in the supply curve of pineapples

Surplus equals:

Bigger than demand

MC =

Change in TC/Change in Quantity

Accounting Profits:

Company's product, makings, "expletive cost"

Government intervention

Consumer and producer surplus (deadweight loss) a surplus lost either producer or consumer surplus because it was not recovered in the market and not gained by anybody

The difference between a firm's total revenue and its total cost is its ________ profit

Economic

18) Ben's cost of making an additional rocking chair is $75.

If he sells it for a $100, his producer surplus is $25 / His marginal cost is equal to $75

Under purely competitive market structure the price is fixed; the following true:

MR = D = P

Capital:

Man made input, land, labor

The cost of producing one more unit of a good or service is equal to its

Marginal Cost

28) A firm maximizes its profit by producing the amount of output such that

Marginal revenue equals marginal cost

The primary goal of a business firm is to:

Maximize profit

Profit Equation

Pi = TR - TC

The supply curve of a price-taker firm in the short run is the:

Portion of a firm's marginal cost curve that lies above average variable cost curve

A rent ceiling set below the equilibrium rent

Price ceiling for rent, controlling what the price of rent is

19) Producer surplus is the ________ summed over the quantity produced.

Price of the good minus the marginal cost of producing it

Revenue Formula:

Price x Quantity

Supply elasticity

Q over P

ATC =

TC/Q

TC =

TFC + TVC

AFC =

TFC/Q

AVC =

TVC/Q

A supply curve is the same as a

The above figure shows the production possibility frontier for an economy. The point or points that are not attainable are

In the short run, a firm will eventually experience rising per-unit costs because of

The law of diminishing returns

A price floor is

The lowest legal price at which a good or service can be traded

If the price elasticity of supply for a good is 0.75, then

The percentage change in the quantity supplied is less than the percentage change in price

Which of the following occurs when a market is efficient?

The sum of consumer surplus and producer surplus is maximized

TP is:

Total amount of product produced; sum of all marginal products

Law of diminishing marginal returns:

additional profit per additional unit is going to (at some point) start declining -- labor is going to be smaller

Marginal analysis and Maximization rule:

comparing additional revenue from additional units / additional costs of additional unit outcome. More marginal revenue than cost / there is a point you need to stop at, if you go above a point your revenue will go down

The decreasing portion of a firm's long run average cost curve is attributive to:

economy scale

Short-run and long-run relationship with input variability and costs:

fixed input can not be changed in the short-run

Law of Supply

flow of the curve because it is positive, how it applies to producers

Market Supply

individual seller supply, supply curve can shift) the quantities that sellers are willing and able to sell at various prices

Supply schedule and curve

positively slope curve, may be vertical line -- due to perfectly inelastic, where sellers are not responsive to price changes, horizontal elastic supply curve fixed price no changing price

Allocative efficiency in competitive markets

production possibilities curve and equilibrium

Equilibrium, shortages, and surpluses

quantity supply, quantity demand, (surplus -- shortage in the market)

23) The law of decreasing returns states that as a firm uses more of a

variable input, with a given quantity of fixed inputs, the marginal product of the fixed input eventually decreases