Economics Chapter 5

5 shifters of supply

1. Price of Resources 2. Number of Producers 3. Technology 4. Taxes and Subsidies 5. Expectations

Which of these is true of both an individual supply curve and a market supply curve?

A change in quantity supplied takes place only when there is a change in price.

Which of the following is NOT a difference between average revenue and marginal revenue?

Average revenue is the most important measure of revenue

According to the video, with gasoline prices at $4 a gallon at the pump, how has Big Oil's refusal to exploit more leases and produce more oil affected the U.S. economy and american consumers?

Consumers pay more for gas, so have less money to spend on other consumer items, which hurts the economy.

A producer's "marginal product" and "total product" are generally the same amount.

False

The third stage of production is distinguished by an increase in output.

False

Which of these best describes the influence of high prices on the behavior of producers?

High prices are an incentive for producers to produce more.

Why is the company portrayed in the video particularly hard-hit by the rising gasoline prices?

It is a trucking business and the entire business runs on gasoline. All 50 trucks use lots of gas.

What risk does a firm take by neglecting to do periodic marginal analyses?

It may lose track of its profit-maximizing quantity of output.

Which of these is the best description of a normal supply curve?

Its slope goes up when the diagram is read from left to right.

________ principle that more will be offered for sale at higher prices than at lower prices

Law of Supply

_______ revenue is the extra income a business gets from the production and sale of ______ additional unit of output.

Marginal, one

What happens to the supply for a product when the price increases?

Nothing it stays the same

What is it called when the quantity demanded is greater than the quantity supplied?

Shortage

At which stage, does the marginal product increase, with each additional worker?

Stage I

At which stage of production does the concept of "diminishing returns" first become significant?

Stage II

According to the graph on Short Run Production, at which stage have too many workers been hired, and the company starts to produce less total product with a negative marginal product?

Stage III

What is it called when the quantity supplied is greater than the quantity demanded?

Surplus

Which of these best describes the influence of high prices on the behavior of producers?

They are an incentive for producers to produce more.

According to the Law of Supply, there is a direct relationship between price and quantity supplied.

True

Changes to variable and fixed input are easiest during a long-run production period.

True

The stages of production are distinguished by their marginal products.

True

The stages of production measure the effects of workforce size on marginal product.

True

Based on what you have learned from the video, when do producers want to produce the most supply?

When price is high

In the short run, the amount of capital available for manufacturing is an example of which of these?

a fixed factor of production

Which of these results from the repeal of an item's subsidies?

a leftward shift of that item's supply curve

Which of these best enables a firm to establish its profit-maximizing quantity of output?

a periodic marginal analysis

Which of these do producers of an item hope to achieve when adopting new technologies?

a shift of the supply curve for that item to the right

Labor in a factory is an example of which of these?

a variable factor of production

Price changes the quantity supplied moves:

along the supply curve

Which of these names the way in which producers regard taxes?

as part of the cost of production

________ mean price of a unit of output

average revenue

________ the mean price of a unit of output

average revenue

________ level of production needed for a firm to recover its costs

break-even point

What resource used to make clothing came to be in short supply due to bad weather and increased demand?

cotton

Which of these is an example of a fixed cost?

depreciation of capital goods

Demand curve goes to the ____

dirt

When is a firm's rate of hiring likely to be highest?

during a phase of increasing marginal returns

________ business conducted over the Internet

e-commerce

What do you call the exact spot on the graph where quantity demanded exactly equals the quantity supplied?

equilibrium

The costs that an organization incurs even when there is little or no activity are ___________ costs, or overhead. ___________ costs are usually associated with labor and raw materials and change with the business's rate of operation or output. Total cost is the sum of _________ and ___________costs.

fixed and variable

Which term is generally associated with machines and other capital goods?

fixed cost

Which terms describe costs that are incurred regardless of a firm's rate of production?

fixed costs and overhead

Which two terms are the most similar in meaning?

fixed costs and overhead

Rent, salaries, and taxes are just some of the _____ costs faced by businesses that are part of its ______.

fixed, overhead

Which of these could a firm accomplish during a short-run production period?

hiring and firing of workers

Quantity supplied increases when the price _______________.

increases

When the price increases the quantity supplied _______

increases

What would probably happen if the moving company profiled in the video passed its increasing costs onto its customers?

it would lose customers who could not afford the higher prices & it would be less competitive with other companies that had not hiked their prices

The costs associated with ______ and materials may change and so are considered ______ costs.

labor, variable

When supply is inelastic and has a change in quantity supplied, due to a change in price, it is a

less proportional change.

What new idea arose from the shortage portrayed in the video?

making fabric from bamboo

________ additional expense of producing one additional unit

marginal cost

________ extra expense created by producing one additional unit of production

marginal cost

Which term denotes the change in total income when one additional unit of output is added?

marginal revenue

________ additional revenue generated from the sale of a single unit

marginal revenue

A graph that shows the quantities supplied at each and every possible price in the _______________ is called a supply curve.

market

When supply is elastic and has a change in quantity supplied, due to a change in price, it is a

more than proportional

If you _____ all the units of product sold by the average price of each unit, you get the business's ____ revenue.

multiply, total

Which of these would an item's producer be most likely to do if total revenue on that item began to drop?

produce less of that item

________ graph showing how a change in the amount of a single variable input affects total output

production function

When supply is unit elastic and has a change in quantity supplied, due to a change in price, it is a

proportional change.

Movement along the supply curve measures a change in _______________ supplied.

quantity

________ amount offered for sale at a given price; point on the supply curve

quantity supplied

Which of these is an example of a variable cost?

raw materials

Average _____ is simply the ______ price each unit of product sells for.

revenue, average

Supply curve go to the ____

sky

A(n) _______________ is a payment to an individual, business, or other group to encourage or protect a certain type of economic activity.

subsidy

________ government payment to encourage or protect a certain economic activity

subsidy

The ______ of fixed and variable costs is called _____ cost.

sum, total

________ the different amounts offered for sale at each possible price in the market

supply

_______________ refers to the amount of a product offered for sale at all possible prices in a market.

supply

________ a chart showing the quantities offered for sale at each possible price in the market

supply schedule

Which of these can be illustrated with a production function?

the effect of an increase in work hours on total output

The 5 Shifters change the supply moves:

the entire supply curve

Which of these industries has the least elastic supply curve?

the nuclear industry

________ entirety of output or production by a firm

total product

________ average price of a unit sold times the quantity sold

total revenue

According to the Law of Supply, when price goes up, quantity supplied goes up .

up

Which direction does a supply curve slope?

upwards

Over which of these does a producer have the most direct control?

variable cost

Under what conditions do Big Oil companies decide it's the right time to develop the oil exploration leases they already have?

when the price of oil is very high