Economics Chapter 5 Vocab

question

Supply
answer

the amount of a product that would be offered for sale at all possible prices that could prevail in the market.
question

Law of Supply
answer

the principle that suppliers will normally offer more for sale at high prices and less at lower prices.
question

Supply schedule
answer

listing of the various quantities of a particular product supplied at all possible prices in the market.
question

Supply curve
answer

A graph showing the various quantities supplied at all possible prices that might prevail in the market at any given time.
question

Market supply curve
answer

The supply curve that shows the quantities offered at various prices by all firms that offer the product for sale in a given market.
question

Quantity supplied
answer

amount that producers bring to the market at any given price.
question

Change in quantity supplied
answer

the change in the amount offered for sale in response to a change in price.
question

Change in supply
answer

a situation where suppliers offer different amounts of products for sale at all possible prices in the market.
question

Subsidy
answer

a government payment to an individual, business, or other group to encourage or protect a certain type of economic activity.
question

Supply elasticity
answer

measure of the way in which quantity supplied responds to a change in price.
question

Elastic supply
answer

the change in price causes a proportionally larger change in quantity supplied.
question

Inelastic supply
answer

a change in price causes a proportionally smaller change in quantity supplied.
question

Unit elastic supply
answer

a change in price causes a proportional change in the quantity supplied.
question

Production function
answer

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.
question

Short run
answer

a period so brief that only the amount of the variable input can be changed.
question

Long run
answer

a period long enough for the firm to adjust the quantities of all productive resources, including capital.
question

Total product
answer

the total output produced by the firm.
question

Marginal product
answer

the extra output or change in total product caused by adding one more unit of variable input.
question

Stages of production: Increasing marginal returns Diminishing marginal returns Negative marginal returns
answer

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.
question

Fixed costs
answer

the costs that an organization incurs even if there is little or no activity.
question

Overhead
answer

broad category of fixed costs that includes rent, taxes, and executive salaries.
question

Variable costs
answer

costs that change when the business’s rate of operation or output changes.
question

Total cost
answer

the sum of the fixed and variable costs.
question

Marginal cost
answer

the extra cost incurred when producing one more unit of output.
question

E-commerce
answer

an electronic business conducted over the internet.
question

Break-even point
answer

production level where total cost equals total revenue.
question

Total revenue
answer

equals the number of units sold multiplied by the average price per unit
question

Marginal revenue
answer

the extra revenue a business receives from the production and sale of one additional unit of output.
question

Marginal analysis
answer

a type of decision making that compares the extra benefits of an action to the extra costs of taking the action.
question

Profit-maximizing quantity of output
answer

level of production where marginal cost is equal to marginal revenue.

Get instant access to
all materials

Become a Member