Econ Chapter 5-1 – Flashcards
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Variable
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A factor that can change
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Quantity supplied
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how much of a good is offered for sale at a specific price
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Market supply schedule
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Relationship between price and total quantity supplied by all firms
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Elasticity of supply
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A measure of how suppliers react to a change in price
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Supply curve
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A graphical representation of a supply schedule
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Supply schedule
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a table that shows the relationship between the price of a good and the quantity supplied
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Production schedule
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A table that shows how the number of workers affects productivity and marginal product
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Law of supply
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The principle that the higher the price, the larger the quantity produced
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The price of home computers rises. According to the law of supply, manufacturers will respond to this price increase by
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Increasing computer production
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Which of the following is the best example of the law of supply?
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When the price of a sandwich rises, the sandwich shop increases the quantity supplied
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When the price of a product goes down, what happens ?
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Some producers produce less, and others drop out of the market.
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Ultimately, the main factor that drives decisions about production is the
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desire to maximize profits
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A supply schedule is characterized by which of the following? a. It shows the quantity supplied at only one price.
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It lists supply for a specific good
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Both individual and market supply schedules show possible combinations of
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Price and quantity supplied
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Which of these best describes a supply curve?
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It always rises from left to right
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Which of these events would indicate a movement along a supply curve for batteries?
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Battery manufacturers raise the price of a package of AA batteries from $3.50 to $3.95
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For which of the following goods is supply likely to be inelastic in the short terms whether prices rise or fall?
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Cargo ships
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A sudden increase in fuel cost sparks a rise in both prices and demand for fuel efficient cars. Yet it takes months for car companies to manufacture more cars. In this case, the supply for cars is
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Inelastic
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If a supply of a good is elastic,
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Producers will not charge their quantity supplied by much if the market price doubles
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Ruth runs a bakery whose supply is highly elastic. When the price of baked goods fall, Ruth will
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Make up the lost revenue by cutting production costs
