Econ - Chapter 4 - Supply

increase in returns; diminishing returns; negative returns

3 stages of production

marginal cost per unit

money per person/marginal product

the company's total cost rises by the same amount every time it increases production by one unit

company A can produce a product at a constant marginal cost. this means that _______

total revenue

price x quantity sold

their marginal costs usually drop as production increases

producers usually sell more at higher prices than at lower prices because ____

price effect

producers want to sell more at higher prices than at lower prices

marginal cost

usually rises as the rate of production increases

inelastic supply

exists when the price effect is small

depreciation

a reduction in value of capital goods as a result of use and age

up and to the right

a supply curve shifts ________

offering producers more money in exchange for the product

a supply curve shows that in a market economy consumers get more of a product by

elastic supply

exists when the price effect is substantial

cost of production

expenses a business or producer has in manufacturing goods and services

marginal revenue

extra or additional revenue from the sale of one or more unit of output; most useful measure of revenue; normally starts out high and decreases as production increases which could make them lower their price

total costs

fixed and variable cost sum

fixed cost

full time employees are an example of what type of cost?

little cost

goal of every business person is to produce as much as possible for as _______ as possible

marginal product

the additional productivity which comes from the addition of one or more worker or any other factor of production

break even point

the amount of output a business needs to see in order to cover its total cost

productivity

the cornerstone or foundation of supply

elasticity of supply

the extent to which a change in price causes a change in the quantity supplied

price effect of supply

the higher the price the more will be offered for sale, the lower the price the lower will be offered for sale

increase the input of factors of production; use higher quality factors of production; more skillful use of factors through knowledge, technology, and innovation

3 things that final products are changed by

fixed cost, variable cost, total cost, marginal cost

4 types of cost

weather, strike, expectations, technology, availability of raw materials, number of sellers, cost of production

7 things that causes changes in supply

becomes more elastic because ranchers have more time to bring in resources into cattle production

If the price of beef rises and remains at the higher level, then over time the supply of beef _______

each business would want to sell a smaller quantity at every price shown, so the market supply would shift to the left

Suppose the cost of milk and other ice cream ingredients rise sharply and the marginal cost increases. As a result, _____

The price of water goes up

Which of the following would not shift the supply line of car-washing services to the right?

variable cost

a cost that changes in total amounts with the rate of operation/output; ex: electrical bill

fixed cost

a cost that does not change

fixed cost

a cost which a business has even if the plant is shut down and output is zero; aka overhead; ex: mortgage, rent, property taxes, salary, interest on bonds, depreciation

marginal costs

additional cost incurred by the business when it produces one additional unit; variable cost which results from using additional factors of production to increase output

supplier

anyone who offers an economic product for sale; if you're looking for a job you're offering your service to sell

more

at higher prices producers usually offer ____ than at lower prices

opportunity cost

business people bear this when producing things we want

expectations of higher future prices for a product

can cause today's supply line to shift to the left

technology

causes a change in supply; faster, cheaper, and more efficient; increased the supply of almost all products

weather

causes a change in supply; frost kills crop which makes crop supply decrease, good temperature and rain could make supply go up

cost of production

causes a change in supply; if the cost goes up and price doesn't change, supply goes down; if supply cost goes down, supply goes up

availability of raw materials

causes a change in supply; if we run out we can't produce anymore

expectations

causes a change in supply; if you expect the price to increase soon, supply will decrease today and when the price goes up the supply goes up

number of sellers

causes a change in supply; more sellers = greater supply; less sellers = less supply

strike

causes a change in supply; people refuse to work so nothing is being supplied

more efficient equipment

causes the supply curve to shift to the right

unit elastic

change in price causes proportional change in quantity supplied

theory of production

deals with the relationship between the input of the factors of production and the output of goods and services

suppliers

decide how much to offer for sale by what is best for the individual supplier and cost in producing that good or service

productivity

determines our standard of living

increase in returns

each worker hired contributes more of the total output than each previous worker; workers not able to handle equipment efficiently

variable cost

hourly employees are an example of what type of cost?

growers will offer fewer pumpkins at each and every price

if bad weather destroys much of the halloween pumpkin crop, then

inelastic

if it is costly and time consuming for producers to change resources

right

if marginal cost falls the supply line will shift to the _____

left

if the number of sellers declines the supply line will shift to the _____

marginal cost/marginal revenue

increase production as long as your _______ is lower than your _________

has

incurs means ___

supply line

movement along a ______ refers to the price effect

decrease in supply

people want to sell less of a product at all possible prices

left

shift to the ___ indicates increase in supply

supply schedule

shows price and quantity supplied at all possible prices

inelastic

small change in price causes small change in quantity supplied

elastic

small change in prices causes a big change in the quantity supplied

law of variable proportions

states that as inputs change so do outputs

law of supply

states that the quantity of an economic product offered for sale varies directly with this price

market supply

sum of all producer's supplies

productivity

the rate of output of final products which is the result of an input made up of the factors of production; how much can be produced in a given amount of time

market supply

the sum of all producers' supplies in a given market

supply

the various amounts of something a producer is willing and able to sell at different possible prices

elastic

time passes and producers have a chance to adjust to price change

supply

to business people, this is the quantity of a product which was supplied at the price that prevailed in the market

diminishing return

total output continues to increase but by smaller amounts

negative returns

total output declines to less than zero; labor is wasted

total profit

total revenue minus total costs

an opportunity cost

when something is produced there is always _______

down/up

when the factors of production are used efficiently the cost goes ___ and the supply goes ____