question

the amount of goods available

answer

Supply

question

producers offer more of a good as its price increases and less as its price falls

answer

Law of supply

question

the amount that a supplier is willing and able to supply at a a specific price

answer

Quantity Supplied

question

a chart that lists how much of a good a supplier will offer at various prices

answer

Supply Schedule

question

a factor that can change

answer

Variable

question

a chart that lists how much of a good all suppliers will offer at various prices

answer

Market Supply Schedule

question

a graph of the quantity supplied of a good at various prices

answer

Supply Curve

question

a graph of the quantity supplied of a good by all suppliers at various prices

answer

Market Supply Curve

question

a measure of the way quantity supplied reacts to a change in price

answer

Elasticity of Supply

question

what happens to firms when price raises?

answer

-existing firms produce more to increase revenue -incentive for new firms to join the market to earn profits

question

what happens to firms when price falls?

answer

-firms will produce less -firms may drop out of the market

question

if a firm is already earning a profit by selling a good, an increase in the price will ___________ (increase/decrease) the firm's profits

answer

increase

question

in all cases, the search for _______ drives the supplier's decision? whether they make the decision to produce more or less

answer

profit

question

T/F: profits appeal to people enjoying success in the market and people outside the market

answer

true

question

rising prices of a good draw new _____ into the market and add to the quantity supplied of the good

answer

firms

question

a supply schedule shows how only _____ affects output? all other factors remain constant

answer

price

question

a rise or fall in price will cause the quantity supplied to change... what will happen to the supply schedule?

answer

the supply schedule will stay the same

question

a change in a good's price moves the seller from one row to another in the same supply schedule, but _____ (does/doesn't) change the supply schedule itself

answer

doesn't

question

what happens in terms of the supply schedule when factors other than price affect output?

answer

sellers build a new supply schedule for new market conditions

question

formula for % change

answer

% change = (old - new)/old x 100

question

if the supply for a good is less than one, then it is _________

answer

inelastic

question

if the supply for a good is greater than one, it is __________

answer

elastic

question

-start section 2 cards-

answer

-start section 2 cards-

question

the change in output from hiring one addition unit of labor

answer

Marginal product of labor

question

a level of production in which the marginal product of labor increases as the number of workers increases

answer

Increasing marginal returns

question

a level of production at which the marginal product of labor decreases as the number of workers increases

answer

Diminishing marginal returns

question

a cost that does not change, no matter how much of a good is produced

answer

Fixed cost

question

a cost that rises or falls depending on the quantity produced

answer

Variable cost

question

the sum of fixed costs plus variable costs

answer

Total cost

question

the cost of producing one more unit of a good

answer

Marginal cost

question

the additional income from selling one more unit of a good; sometimes equal to price

answer

Marginal revenue

question

the total cost divided by the quantity produced

answer

Average cost

question

the cost of operating a facility, such as a factory or a store

answer

Operating Cost

question

business owners have to consider how many workers to hire, how do they do this?

answer

they must consider how the number of workers they hire will affect their total production

question

the relationship between labor and output must be weighed by the _________ _______

answer

business owner

question

adding another individual could allow for ___________ of labor

answer

specialization

question

specialization increases _______ per _______

answer

output per worker

question

increasing marginal returns

answer

-positive output you get from hiring one extra person

question

when the specialized labor runs out of jobs, adding more people __________ (increases/decreases) the total output, but _________ (increases/decreases) rate

answer

increases decreases

question

diminishing marginal returns

answer

-amount of output that is reduced for each individual laborer hired -produce less and less output from each additional unit of labor

question

workers have a limited amount of capital example in terms of pizza

answer

people waste time waiting on the pizza to come out of the oven for example

question

Negative Marginal Returns example in terms of pizza

answer

WAY too many people in the kitchen make it crowded and cause chaos -they get in each other's way and disrupt ptroduction

question

the idea level of level output is where marginal revenue is equal to __________ _______

answer

marginal costs

question

-start section 3 cards-

answer

-start section 3 cards-

question

a government payment that supports a business or market

answer

Subsidy

question

a tax on the production or sale of a good

answer

Excise tax

question

government intervention in a market that affects the production of a good

answer

Regulation

question

if the cost of inputs (labor, raw materials) increase, there is a higher _________ ______ for producing a good

answer

marginal cost

question

what happens if input costs increase too much?

answer

the marginal cost to produce the good may become higher than the price the good is sold at and therefore the firm would no longer be profitable

question

if a firm had no control over the rising price of production, they must cut production to ______ the marginal cost until the marginal cost is equal to the ______

answer

lower price

question

when the price to produce a good increases, supply _____ at each price which would shift the supply curve to the _____

answer

falls left

question

in addition to increasing, input costs can also ____.

answer

drop

question

What is are some examples that make input costs drop?

answer

*Technology* -automation saves labor costs (ex. self check out) -computers make tasks easier and cut some costs (ex. turbotax) -emails help businesses communicate for free

question

when technology lowers price it also can ________ supply at all price levels, which makes the curve shift to the _____.

answer

increase right

question

what industry does the government freuently grand subsidies to?

answer

the farming industry

question

why are subsidies to the farming industries controversial?

answer

1. government tells farmers to only plant on plot's A & B & not C to keep prices of the crops high to bring in more money 2. for farmers to make up for the lost land of plot C, they will use pesticides etc. in order to make up for their loses (these practices can cause harmful effects to humans)

question

excise taxes _________ (increase/decrease) production costs by adding an extra cost for each unit sold

answer

increase

question

what types of products are excise taxes often used on?

answer

goods they want to discourage the consumption of. ex.) cigarettes, alcohol, high pollutant gasoline

question

excise taxes are ________, meaning some people may not realize they are paying for them

answer

indirect

question

an excise tax causes the supply of a good to __________ (increase/decrease) at all price levels, causing the curve to shift _____

answer

decrease left

question

how can the government raise or lower supply through indirect means?

answer

regulation

question

examples of government regulation

answer

ex.) EPA on car pollution ex.) FDA on food & drugs

question

T/F: supplies of imported goods to US are affected by changes in other countries

answer

true

question

US imports from India? increase in wages in India would __________ (decrease/increase) supply. Why?

answer

decrease supply because can't hire as many workers

question

US imports oil from Russia? new oil discovery in Russia could __________ (decrease/increase) supply. Why?

answer

increase supply because you are mining more oil and so more is available

question

if a seller expects the price of a good to rise in the future, the seller will do what? what is the seller's motive?

answer

the seller will store the good now in order to sell more in the future. motive = to get most profit.

question

if the the price of the goods is expected to drop in the near future, sellers will earn more money by doing what?

answer

by placing goods on the market immediately before the price falls

question

expectations of higher prices will do what to supply?

answer

will reduce supply now and increase supply later available to the customers in order to make the most profit

question

expectations of lower prices will do what to supply?

answer

will increase supply now and reduce later in order to make the most profit

question

if more suppliers enter a market to produce a certain good, the market supply of the good will _____ and the supply curve will shift to the _____

answer

rise right

question

if suppliers stop producing the good and leave the market, the supply will ______ & the supply curve will shift to the ______

answer

decline left

question

there is a positive relationship between the number of suppliers in a market and the market supply of the good. what does this mean?

answer

more suppliers = higher supply & less suppliers = less supply

question

for many firms the key factor of cost is ______________

answer

transportation

question

firms may chose to locate themselves closer to ________ like raw materials, or to ________

answer

inputs consumers

Econ Ch. 5: Supply Vocab ; Notes – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards