Chapter 5, Supply T/F
A change in price, other things constant, changes quantity supplied along a given supply curve.
true
A leftward shift of the supply curve indicates a decrease in supply.
true
In the short run, at least one resource is fixed.
true
Producers supply more of a product at a higher price than at a lower price, so the supply curve slopes upward.
true
Resources that can be adjusted quickly to change output are called variable resources.
true
The elasticity of supply equals the percent change in quantity supplied divided by the percent change in price.
true
In the short run, the total cost is the sum of a firm's fixed and variable costs of production.
true (double check)
Marginal revenue is equal to total revenue divided by the number of products sold.
true (double check)
The marginal cost of production is the change in total cost divided into the change in quantity.
true (double check)
what is a variable resource for a firm
labor
how do the determinants change the supply curve? left/right etc
Anything that affects production costs and profit opportunities helps shape the supply curve Increase- shifts right decrease- shifts left
what are the determinants of supply
Change in the cost of resources used to make the good Change in the Prices of Other Goods these resources could make Change in Technology used to make the good Change in Producer Expectations Change in the number of suppliers/sellers in the market
A change in price, other things constant, causes a shift of a supply curve either to the left or to the right.
False
Each year, millions of new firms enter the U.S. marketplace and only a few leave
False
The elasticity of supply indicates how responsive consumers are to a change in price
False
A firm breaks even when total revenue just covers total cost.
True
A firm faces two kinds of costs in the short run: fixed cost and variable cost.
True
A higher price makes producers more willing and better able to increase quantity supplied.
True
According to the law of supply, the lower the price for a product, the smaller the quantity supplied.
True
An increase in the cost of producing a product will cause the supply curve for that product to shift to the left.
True
Any change in the cost of resources used to make a good will affect the supply of the good
True
Each year, millions of new firms enter the U.S. marketplace and even more leave.
True
Elasticity of supply = Percentage change in quantity supplied ÷ Percentage change in price
True
Firms try to avoid diseconomies of scale.
True
Just as demand becomes more elastic over time as consumers adjust to price changes, supply becomes more elastic over time as producers adjust to price changes.
True
Profit = Total revenue - Total cost
True
With supply, the assumption is that producers try to maximize utility.
True
what does the law pf diminishing returns mean?
as more of one resource is added to a given amount of another, marginal product declines
what happens in the long run
all resources can be varied, a firm can enter or leave
the term quantity supplied refers to
amount offered at a specific price shown by a point
increase in the price of diesel fuel is likely to _____ costs of trucking companies and shift the supply curve for shipping products by truck to the _______
increase, right
as a small firm grows to become large what happens to the economies/diseconomies of scale?
economies of scale- firm is expanding average cost declines diseconomies of scale- firm is too big for its own good
Expecting higher prices in the future will prompt producers of these goods to increase their current supply.
false
In the long run, no more than one type of resource is fixed.
false
The law of diminishing returns is demonstrated when hiring additional workers increases total production by successively greater amounts.
false
elasticity of supply indicates
how responsive products are to price change (% change in quantity/ % change in price)
what could cause a market supply curve for a food product to shift to the right
increase in quantity
when price decreases a producer becomes ____ to supply the good
less able
what does economies of scale mean?
long run average cost declines as firm size increases
what happens when prices for a product change? (supply curve question)
movement in the supply curve (up or down)
law of supply states that the quantity of a good is usually directly related to its
price
how does elasticity change over longer periods of time
supply becomes more elastic
what happens when a firms total revenue falls short of its total cost year after year
the firm will fail
