ch.3

what summarizes a business's selling plans.

Individual supply curve

Someone who decides to charge the prevailing price and whose actions do not affect the prevailing price.

Price-takers

The interdependence principle reminds you that your best choice as a seller: - depends on many other factors beyond price. - is best made incrementally, breaking "how many?" questions into a series of smaller, or marginal, decisions. - is best made after you evaluate the full set of costs and benefits of any choice, and only pursue those whose benefits are at least as large as their costs. - is best made when your decisions reflect the opportunity cost, rather than just the out-of-pocket financial costs.

depends on many other factors beyond price.

The marginal product of an input declines as you use more of that input.

diminishing marginal product

In the _____ diminishing marginal product can occur when some of your _____ are fixed. - short run; inputs - long run; outputs - short run; outputs - long run; inputs

short run; inputs

The increase in output that arises from an additional unit of an input, like labor.

marginal product

The Rational Rule for Sellers is important but does NOT: - tell sellers how to set the price against the competitors. - provide useful advice for businesses. - guide managers in making the decisions that will earn their businesses the largest possible profit. - help managers to keep a laser-like focus on their marginal costs when making supply decisions.

- tell sellers how to set the price against the competitors.

The supply curve is upward-sloping because: the marginal cost curve is downward-sloping. the marginal cost curve is upward-sloping. an increase in output arises from fewer units of an input, such as labor. a decrease in output arises from an additional unit of an input, such as labor.

the marginal cost curve is upward-sloping.

The individual supply curve is _____ because at higher gas prices, a supplier plans to supply a _____ quantity. - downward-sloping; smaller - upward-sloping; larger - upward-sloping; smaller - downward-sloping; larger

upward-sloping; larger

When following the Rational Rule for Sellers in Competitive Markets, it is NOT true that: - your supply curve is your marginal cost curve. - your supply curve is downward-sloping because of rising marginal costs. - your supply curve is upward-sloping because of rising marginal costs. - price = marginal cost.

your supply curve is downward-sloping because of rising marginal costs.

Which of these market types has the largest number of firms?

perfect competition

which is a special case in which - all businesses are selling an identical good - there are many sellers and many buyers, each of whom is small relative to the size of the market.

perfect competition,

Lower marginal costs make it profitable to sell a larger quantity at any given price, and so will lead to: - an increase in supply. - a decrease in supply. - no change in the supply. - an increase in demand.

an increase in supply.

When existing businesses leave the market, they _____ the total quantity supplied at each price, shifting the supply curve to the decrease; left decrease; right increase; left increase; right

decrease; left

When your suppliers increase the prices of your inputs, they increase your _____, and this will shift your supply curve to the _____. marginal costs; left marginal costs; right fixed costs; left fixed costs; right

marginal costs; left

When your suppliers decrease the prices of your inputs, they decrease your _____, and this will shift your supply curve to the _____. marginal costs; right fixed costs; right fixed costs; left marginal costs; left

marginal costs; right