Chapter 5 Economics

diminishing marginal returns

a level of production in which the marginal product of labor decreases as the number of workers increases

How is the elasticity of supply affected by the way a product is produced?

If there are more needed resources available then it is more elastic

What cost advantage does e-commerce offer businesses?

It has a low financial cost

What might happen to make a producer decrease his or her supply of a product?

Things that can cause a decrease in supply include higher production costs, producer expectations and events that disrupt supply

supply schedule

a table that shows the relationship between the price of a good and the quantity supplied

market supply curve

a graph of the quantity supplied of a good by all suppliers at different prices

Why is it necessary to know fixed, variable, and total costs to determine marginal cost?

Because in order to find marginal cost you have to divide the others

variable costs

costs that vary with the quantity of output produced

profit-maximizing quantity of output

reached when marginal cost and marginal revenue are equal

short run

the period of time during which at least one of a firm's inputs is fixed

subsidy

A government payment that supports a business or market

What is the difference between marginal revenue and total revenue?

Marginal Revenue is change in total revenue divided by change in quantity while total revenue comes in for all units sold.

Law of supply

Tendency of suppliers to offer more of a good at a higher price

supply

The amount of goods available

Total cost

fixed costs plus variable costs

quantity supplied

the amount of a good that sellers are willing and able to sell

marginal cost

the cost of producing one more unit of a good

break-even point

the point at which the costs of producing a product equal the revenue made from selling the product

production function

the relationship between quantity of inputs used to make a good and the quantity of output of that good

total product

total output produced by the firm

average revenue

total revenue divided by the quantity sold

Why do supply and demand curves slope in opposite directions?

As the price increases, less quantity is demanded. This is why the demand curve slopes down to the right. Because price and quantity move in opposite directions on the demand curve, the price elasticity of demand is always negative

What is the difference between Average revenue and marginal revenue?

Average revenue is total revenue divided by units sold while marginal revenue is the revenue gained by additional outputs produced.

Why dont economists consider the effect of changes to technology when focusing of short run?

Changes in technology cannot be made quickly, so they do not affect production in the short run.

fixed costs

Costs that do not vary with the quantity of output produced

What is the difference between a fixed cost and a variable cost?

Fixed costs do not vary with the quantity of output produced but variable costs do

e-commerce

Web-based economic activities

When does marginal product equal total product?

When the marginal product is at the best/ greatest point

How can stages of production be used to determine the most profitable number of workers to hire?

When you are at the break even point you should stop hiring .