Chapter 5 Economics Test – Flashcards
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two factors of supply
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the willingness and the ability to supply
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marginal product
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the total change in production that results from hiring one more employee
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how to calculate total cost
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add fixed costs and variable costs
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how to calculate marginal cost
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change in total cost/change in total product
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6 factors that cause shifts in supply
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input costs, labor productivity, government action, technological advances, number of producers, producer expectations
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factor that causes a shift in quantity supplied
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price
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how responsive producers are to changes in price
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elasticity of supply
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how to calculate total revenue
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price times quantity
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profit-maximizing output is where what two things are equal
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marginal cost and marginal revenue
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how to calculate profit
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total revenue - total costs
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law that explains the shape of the demand curve
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law of diminishing marginal utility
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more is demanded when income increases
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normal goods
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6 factors that shift demand curves
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income, market size, consumer tastes, consumer expectations, substitute goods, complimentary goods
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how to calculate elasticity of demand
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([original quantity - new quantity] / original quantity x100)/([original price - new price] / original price x 100)
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elasticity of demand percentages
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>1 elastic, <1 inelastic, =1 unit elastic
