Supply Review

Flashcard maker : Lily Taylor
Why would the supply curve of a dog walking business be considered elastic?
because it can hire workers quickly if the price rises
If supply is elastic
it reacts strongly to changes in price.
What is needed to create a supply schedule for a fruit smoothie shop?
the price charged and the number of smoothies supplied
What is a supply curve?
a graph of the quantity supplied of a good at different prices
What is the tendency of suppliers to offer more of a good at a higher price?
law of supply
What is a market supply schedule?
a chart that lists how much of a good all suppliers will offer at different prices
What factor might lead to the opening of several new pizzerias in a town?
The price of a slice of pizza has gone up.
Any factor that can change is
a variable.
A raise in the price of a product
increases competition.
The measure of the way quantity supplied reacts to a change in price is
elasticity of supply.
The cost of producing one more unit of a good is known as a(n)
marginal cost.
A cost that rises or falls depending on how much is produced is a(n)
variable cost.
If the total cost of producing 300 leather jackets is $400 and the total cost of producing 301 leather jackets is $435, what is the marginal cost of production at 300 leather jackets?
$35
What is the level of output every firm strives for?
when marginal revenue equals marginal cost
The additional income from selling one more unit of a good, sometimes equal to price, is
marginal revenue.
What does the beanbag factory experience when the number of workers is increased from 2 to 3?
increasing marginal returns
Total cost is
fixed costs plus variable costs.
If the fixed cost of producing video games is $14, and the variable cost of producing seven video games is $12, how much is the total cost of producing seven video games?
$26
A cost that does not change, no matter how much of a good is produced is a(n)
fixed cost.
How does a firm calculate its profit?
total revenue minus total cost
Government intervention in a market that affects the production of a good is
regulation.
Which of the following is a way entrepreneurs influence supply?
technology
A tax on the production or sale of a good is called
an excise tax.
What is a negative effect of the U.S. farm subsidies that pay farmers to take land out of cultivation?
Farmers use more pesticides on lands they do cultivate to make up for lost production.
What happens to supply when input costs go up?
It decreases because the good becomes more expensive to produce.
A government payment that supports a business or market is
a subsidy.
If a firm’s product is perishable, where is the firm usually located?
near its consumers
New advances in technology usually
all of the above.
Which of the following will always cause a supply curve to shift to the left?
excise taxes
Why would a farmer store his or her soybeans for future sale instead of selling them right after harvest?
Inflation is running at 25 percent.
Which of the following leads to an increase in supply?
a decrease in the cost of raw materials
If sellers expect the price of a good to rise in the future, they are likely to
store goods now and sell more in the future.
Which of the following is an example of a variable cost?
raw materials
A market supply curve shows
the quantity supplied by producers at different prices.
The change in output from adding one more worker is called
the marginal product of labor.
A subsidy is
a government payment to support a business or market.
The key factor that determines whether the supply of a good will be elastic or inelastic is
time.
____________ is a measure of the way suppliers respond to a change in price.
Elasticity of supply
According to the law of supply,
the higher the price, the greater the quantity produced.
A producer’s profits are maximized when marginal costs
are equal to marginal revenue.
Which of the following is NOT a fixed cost?
electricity
When a business is calculating its operating costs, it must include
variable costs.
The law of supply describes the relationship between
price and quantity supplied.
The supply curve
always rises from left to right.
If the market price for a beanbag is $24, and the marginal cost for the beanbag is $7, the marginal revenue from the beanbag would be
$24.
Marginal cost is
the cost of producing one more unit of a good.
Advances in technology usually
lower costs and increase supply at all price levels.
When a percentage change in price is perfectly matched by an equal percentage change in quantity supplied, elasticity is exactly one, and supply is
unitary elastic.
Which of the following products is likely to have a built-in excise tax?
high-pollutant gasoline

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