Chapter 5 Economics Test Review – Flashcards
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Increasing Marginal Returns
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Level of production in which the marginal product of labor increases as the number of workers increases
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Diminishing Marginal Returns
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Level of production in which the marginal product of labor decreases as the number of workers increases
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Marginal Revenue
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the additional income from selling one more unit of good; sometimes equal to price
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Marginal Product of Labor
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the change in output from hiring one additional unit of labor
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Marginal Cost
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the cost of producing one more unit of good
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Market Supply Schedule
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a chart that lists how much of a good all suppliers will offer at different prices
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Subsidy
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Government payment that supports a business of market
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Supply Schedule
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a chart that lists how much of a good a supplier will offer at different prices
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Supply Curve
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A graph of the quantity supplied of a good at different prices
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Elasticity of Supply
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A measure of the way quantity supplied reacts to a change in price
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Excise Tax
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A tax on the production or sale of a good
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Law of Supply
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Tendency of suppliers of a good at a higher price
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Variable Cost
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A cost that rises or falls depending on how much is produced
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Which of the following receives government subsidies that are in place to protect the population rather than economic reasons?
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Agricultural Subsidies
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What factor has the greatest influence on elasticity and inelasticity of supply?
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Labor
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When the selling price of a good goes up, what is the relationship to quantity supplied?
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The cost of production goes down.
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Which of the following is an example of lower production costs brought about by the use of technology?
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The use of email to replace slower surface mail
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Which of the following is an example of a good with an inelastic supply?
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Apples
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What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future?
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Store the goods until the prices rises
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What is the effect of import restrictions on prices?
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They cause prices to rise.
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Which of the following is the best example of the law of supply?
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A sandwich shop increases the number of sandwiches they supply every day when the price is increased.
