Test Answers on JA Economics Chapter 4 Review – Flashcards
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Marginal Cost
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Usually Rises as the rate of production increases.
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Supply
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The various amounts of something a producer is willing and able to sell at different possible prices.
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Elastic Supply
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Exists when the price effect is substantial.
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Decrease in Supply
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People want to sell less of a product at all possible prices.
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Price Effect
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Producers want to sell more at higher prices than at lower prices.
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- Inelastic Supply
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Exists when the price effect is small.
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the company's total cost rises by the same amount every time it increases production by one unit.
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- A product is produced at a constant marginal cost when
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elastic because ranchers have more time to bring resources into cattle production.
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- If the price of beef rises and remains at a constant rate, then over time the supply of beef becomes more
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offering producers more money in exchange for the product.
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- In a market economy, producers get more of a product by
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offer pumpkins at each and every price.
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If bad weather destroys much of the Halloween Pumpkin Crop, then growers will
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lower prices.
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- At higher prices, producers will offer more than at
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- Price Elasticity of Supply
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The strength of the price effect on supply.
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producers can quickly and easily change the amount of resources they use after a price change.
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- The supply is elastic when
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it is costly and time consuming to change the amount of resources they use.
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- The supply is inelastic when
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right.
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- If marginal cost falls, the supply line will shift to the
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left.
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- If the number of sellers declines, then the supply line will shift to the
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Opportunity Cost
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the benefit, or benefits, you could have received by taking an alternative action.
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Marginal Cost Of Production
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The change in total cost that comes from making or producing one additional item.
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Law of Supply
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positive relationship between the number supplied and the price of a product.
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1) Changes in the Marginal Cost Of Production 2) Changes in the number of producers 3) Change in expectations
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3 Things that can change the Supply
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Changes in the Marginal Cost Of Production
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Buisenesses invest in ways to improve production strategies
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Changes in the number of producers
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When a new buiseness enter the market, the overall supply will increase. Ex. When roller blades entered the economy, all roller blade cpompanies increased supply
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Change in expectations
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If producers expect higher or lower prices in the future for their products, they may change the amount supplied today.
