Lesson 2 Fill-in-the-Blank

High gas prices were an incentive to use plant-based __________, which shifted productive __________ to a new economic sector.

biofuels/resources

Every firm must reach its __________ point, at which it has enough money from sales to cover all its __________.

break-even/operating costs

The imposition of a price __________ may lead to __________ of products as manufacturers reduce production due to lower profits.

ceiling/shortages

A lack of __________ in the economy often leads to lower __________ prices.

confidence/stock

Profit-maximizing quantity of output is the level of production at which marginal __________ is equal to __________.

cost/marginal

Stage 2 illustrates the principle of __________ returns, where output increases at a diminishing rate as more __________ are added.

diminishing/workers

In a product with __________ supply, a change in price leads to a proportionally larger change in quantity supplied.

elastic

Supply is __________ if a company can react to new prices quickly.

elastic

Demand is __________ when the price change results in a relatively larger change in quantity demanded. People __________ need products urgently with this type of demand.

elastic/do not

When a purchase requires more of a person's income, it tends to be __________. However, if the costly purchase is for a product or service a person needs urgently, the demand becomes more __________.

elastic/inelastic

Generally, the more available substitutions are, the more __________ the demand is. The __________ of the market can affect demand elasticity in cases of substitutions.

elastic/size

Too often, it requires __________ conditions before the government implements policies to achieve its economic and __________ goals.

extreme/social

Some of the problems with rationing include perceived __________, the cost of administration, distorted __________, and abuse and misuse.

fairness/incentives

People are __________ with the fact that products have prices, and a reasonable or sale price is often an __________ to consumers to purchase a product.

familiar/incentive

With online selling, the __________ costs are very low, and the v point is also lower than it would be in a real store.

fixed

Rent, salaries, and taxes are just some of the __________ costs faced by businesses that are part of its __________.

fixed/overhead

When businesses raise prices on products with inelastic demand, total revenues are more likely to __________ than when prices are increased on a product with elastic demand.

increase

If resources need to make a product are very __________ or it is difficult to increase production quickly, then the supply is generally __________.

limited/inelastic

The __________ is a production period long enough for the firm to adjust the quantities of all its __________, including capital.

long run/productive resources

The __________ product is the measure of output caused by adding one more unit of variable __________.

marginal/input

The law of Supply states that __________ of a product will be offered at a high price and __________ of a product will be offered at a low price.

more/less

A production function shows how total __________ changes when one __________ of production changes while others stay the same.

output/variable input

A change in quantity supplied only takes place if there is a change in __________.

price

The supply schedule lists the different __________ of a product that is supplied all possible __________ in the market.

quantities/prices

Although some government __________ increase product __________ for consumers, they may also cause an increase in prices.

regulations/safety

The cost of __________ and using more efficient __________ are two factors that affect the supply of a product.

resources/technology

Average __________ is simply the average price of each unit of product sells for.

revenue

In the __________ run, only one variable __________ can be changed to alter supply.

short/input

A __________ paid to a business by the government usually has the effect of lowering cost and increasing __________.

subsidy/supply

When the price of oil increases sharply, that may indicate a lowering of __________ and may indicate __________ ahead for the economy.

supply/trouble

In stage 1 of production, each additional __________ tends to __________ production.

worker/increase

When __________ are motivated and well trained, __________ goes up and supply increases.

workers/productivity

Business, especially sales, conducted electronically over the __________ is known as __________.

Internet/e-commerce

Price ceilings set for rent control are typically __________ and may not be high enough for __________ to make a profit.

arbitrary/landlords

In the U.S. __________ free enterprise economy, the government may set __________ at a particular level to achieve certain social goals.

modified/prices

Price is the __________ value of a product and helps us make economic __________.

monetary/decisions

In times of crisis, the __________ may impose a system of __________ to make sure that everyone gets their fair share of needed products.

government/rationing

Demand is __________ when the price change results in a relatively smaller change in quantity demanded. People __________ need products urgently with this type of demand.

inelastic/do

If you cannot put off purchase of a product, demand is __________. If you can wait, demand is __________.

inelastic/elastic

Because demand for gas is basically __________, when gas prices are __________, people spend a greater portion of their income on gas and have less money to spend elsewhere.

inelastic/high

The costs associated with __________ and materials may change and so are considered __________ costs.

labor/variable

In a __________ economy, prices are __________ and can change as conditions and resources change.

market/flexible

Supply elasticity is a __________ of how much the quantity of a product supplied reacts to a change in __________.

measure/price

What types of elasticity do the following scenarios illustrate? Change in price and change in revenue move in the same direction. __________ Change in price and change in revenue move in opposite directions. __________ Price change has no effect on revenue. __________

Inelastic/Elastic/Unit elastic

__________ revenue is the extra income a business gets from the production and sale of __________ additional unit of output.

Marginal/one

__________ product is often related to the number of __________ added to the production process.

Marginal/workers

The __________ cost a business has when it produces one more unit of output is called __________ cost.

additional/marginal

When government sets a price __________, the product becomes more profitable to produce and a __________ may result.

floor/surplus

The price of __________ tends to go up when the economy is in a __________.

gold/downturn

If you __________ all the units of product sold by the average price of each unit, you get the business's total revenue.

multiply

In Stage 3 of production, adding more workers has a __________ effect on production.

negative

In a perfectly competitive economy, prices are __________ in that they favor neither the producer nor the consumer.

neutral

A __________ load from the government to a necessary producer does not have to be __________.

nonrecourse/repaid

Total expenditures (or total revenue) is found by multiplying the __________ of a product by the __________ for any point along the __________ curve.

price/quantity demanded/demand

The market supply curve is a graph that shows how much of a __________ is offered at various prices by __________ producers who sell that product in a given market.

product/all

When business owners think about __________, they must consider both cost and revenue from __________.

profitability/sales

The __________ price floor is set by the government to stabilize __________ prices.

target/farm

Paying higher __________ sometimes cause a dip in supply because they raise the __________ of production.

taxes/cost

Demand is __________ when the price change results in a proportional change in quantity demanded. This type of demand is __________ to find.

unit elastic/difficult

With __________ elasticity supply, price changes and the amount of the supply are __________.

unit/proportional