Economics Ch. 5: Supply
What factors can cause a change in supply? (2 card set!) Describe them.
1) Costs of input: If it costs more to produce a good, then the supply will increase. 2) Productivity: If workers are willing to produce more, than supply increases. Happy workers are more productive. 3) Technology: New machines, chemicals, and programs can cause an increase of productivity. 4) Taxes: Taxes cause the cost of production to go up, causing a decrease in demand.
What are the four key measures of cost? (FVTM)
1) Fixed cost: costs that do not change much: salaries, rent, and taxes. 2) Variable cost: the change that occurs when output changes. eg: electric power, shipping charges, new machines, etc. 3) Total cost: The sum of fixed and variable costs. 4) Marginal cost: Costs from extra production
What factors can cause a change in supply? (2 card set!) Describe them.
5) Subsidies: The opposite of taxes- a government payment to protect an industry. This cause an increase in production. 6) Expectations: If a producer expects a product to be in demand, they will increase supply. During winter, clothing manufacturers expect to sell more coats, so they supply more coats. Duh. 7) Government regulations: The government may say that a product unsafe and must be 8) Number of suppliers: More sellers means less sellers supplying goods.
What is revenue?
Revenue is the total number of units sold multiplied by the cost of each unit. Selling 10 hats at $6.00 each gives a revenue of $60.
The higher a price that a seller can sell a good at, the greater the quantity the seller will supply.
Describe the general principle of this supply curve.
What is supply?
Supply is the amount of a product that would be offered for sale at a certain price. The law of supply says that sellers will normally have a higher supply when there are high prices.
