Economics Chapter 5 Vocab – Flashcards
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Supply
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the amount of a product that would be offered for sale at all possible prices that could prevail in the market.
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Law of Supply
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the principle that suppliers will normally offer more for sale at high prices and less at lower prices.
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Supply schedule
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listing of the various quantities of a particular product supplied at all possible prices in the market.
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Supply curve
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A graph showing the various quantities supplied at all possible prices that might prevail in the market at any given time.
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Market supply curve
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The supply curve that shows the quantities offered at various prices by all firms that offer the product for sale in a given market.
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Quantity supplied
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amount that producers bring to the market at any given price.
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Change in quantity supplied
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the change in the amount offered for sale in response to a change in price.
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Change in supply
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a situation where suppliers offer different amounts of products for sale at all possible prices in the market.
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Subsidy
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a government payment to an individual, business, or other group to encourage or protect a certain type of economic activity.
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Supply elasticity
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measure of the way in which quantity supplied responds to a change in price.
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Elastic supply
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the change in price causes a proportionally larger change in quantity supplied.
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Inelastic supply
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a change in price causes a proportionally smaller change in quantity supplied.
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Unit elastic supply
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a change in price causes a proportional change in the quantity supplied.
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Production function
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a figure that shows how a total output changes when the amount of a single variable input (usually labor) changes while all other inputs are held constant.
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Short run
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a period so brief that only the amount of the variable input can be changed.
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Long run
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a period long enough for the firm to adjust the quantities of all productive resources, including capital.
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Total product
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the total output produced by the firm.
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Marginal product
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the extra output or change in total product caused by adding one more unit of variable input.
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Stages of production: Increasing marginal returns Diminishing marginal returns Negative marginal returns
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1.)Increasing marginal returns: as long as each new worker contributes more to total output than the worker before, total output rises at an increasing rate. 2.)Diminishing marginal returns: the total production keeps growing, but it does so by smaller and smaller amounts. 3.)Negative marginal returns: the marginal products of additional workers are negative. total output falls.
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Fixed costs
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the costs that an organization incurs even if there is little or no activity.
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Overhead
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broad category of fixed costs that includes rent, taxes, and executive salaries.
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Variable costs
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costs that change when the business's rate of operation or output changes.
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Total cost
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the sum of the fixed and variable costs.
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Marginal cost
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the extra cost incurred when producing one more unit of output.
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E-commerce
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an electronic business conducted over the internet.
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Break-even point
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production level where total cost equals total revenue.
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Total revenue
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equals the number of units sold multiplied by the average price per unit
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Marginal revenue
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the extra revenue a business receives from the production and sale of one additional unit of output.
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Marginal analysis
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a type of decision making that compares the extra benefits of an action to the extra costs of taking the action.
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Profit-maximizing quantity of output
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level of production where marginal cost is equal to marginal revenue.
