Economics Chapter 5
A subsidy is
a government payment to support a business or market
Advances in technology usually
lower costs and increase supply at all price levels
The law of supply describes the relationship between
price and quantity supplied
If sellers expect the price of a good to rise in the future, they are likely to
store goods now and sell more in the future
A decrease in the cost of raw materials causes an increase in
supply
Marginal cost is
the cost of producing one more unit of a good
According to the law of supply
the higher the price, the greater the quantity produced
The change in output from adding one more worker is called
the marginal product of labor
A market supply curve shows
the quantity supplied by producers at different prices
The key factor that determines whether the supply of a good will be elastic or inelastic is
time
When a percentage change in price is perfectly matched by an equal percentage change in quantity supplied, elasticity is exactly one, and supply is
unitary elastic
Raw materials is an example of a
variable cost
When a business is calculating its operating costs, it must include
variable costs
If the market price for a beanbag is $24, and the marginal cost for the beanbag is $7, the marginal revenue from the beanbag would be
$24
The supply curve
always rises from left to right
A producer's profits are maximized when marginal costs
are equal to marginal revenue
Hair cutting is a business that has ____________ supply
elastic
____________ is a measure of the way suppliers respond to a change in price
elasticity of supply
Which of the following is NOT a fixed cost; building construction costs, rent, electricity or property taxes
electricity
Which of the following products is likely to have a built-in excise tax; shoes, apples, clothing and high-pollutant gasoline.
high-pollutant gasoline