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Ch. 5-Supply
Supply
| Question | Answer |
|---|---|
| Economists assume producers try to maximize ______________. | profit |
| _____________________ is the total dollars received from consumers. | Total revenue |
| _______________________ includes the cost of all resources used by a firm in producing goods and services. | Total cost |
| ___________ indicates how much of a product producers are both willing and able to sell at each possible price during a given period of time. | Supply |
| The law of supply states that price and quantity supplied have a ___________ relationship. | direct |
| As price goes up, the quantity supplied goes ____________ , and as price goes down, the quantity supplied goes ______________. | up; down |
| What are the 2 things that explain the law of supply? | 1.Producers offer more for sale when the price rises because producers are more willing to supply the good. 2.Higher prices also increase the producer’s ability to supply the good |
| A __________________________ is a table that shows how much of a product producers supply at various prices. | supply schedule |
| A ______________________ is the graphical representation of the law of supply. | supply curve |
| ___________________ is the amount of product that producers are willing an able to sell at a specific price. | Quantity supplied |
| The sum of the individual supplies of all producers in the market is called the ______________________________. | market supply |
| The supply curve slopes up and has a _____________ slope. | positive |
| Elasticity of supply = _________________ . | percentage change in quantity supplied divided by percentage change in price |
| The elasticity of supply measures how ________ producers are to price change. | responsive |
| Supply is __________ if greater than 1.0. | elastic |
| Supply is ________________ if equal to 1. | unit-elastic |
| Supply is _____________ if less than 1. | inelastic |
| What are the factors that affect the elasticity of supply? | 1. How costly it is to change output 2. Length of time to adjust 3. The ease of increasing quantity supplied |
| The slower that marginal cost rises as output expands, the greater the good’s _________________ of supply. | elasticity |
| The elasticity of supply is greater in the ______________ (short-run / long-run) because producers have more time to adjust. | long-run |
| The more difficult it is for producers to increase quantity supplied in response to a higher price, the more __________________ (elastic/ inelastic) supply will be. | inelastic |
| What are the factors that cause a shift in supply? | 1. Cost of resources 2. Productivity 3. Changes in technology 4. Expectations 5. Number of sellers in the market 6. Taxes/subsidies 7. Government regulations |
| A _________________ along a supply curve is caused by a change in price and results in a change in the quantity supplied. | movement |
| A ___________ of the supply curve is caused by one of the determinants of supply other than price and results in a new supply curve. | shift |
| Price is always shown on the ___________ axis and quantity is always shown on the ___________ axis in economics. | vertical (y); horizontal (x) |
| A change in technology that lowers the cost of producing a good shifts the supply curve to the ________. | right |
| An expectation of higher prices in the future for oil shifts the current supply curve of oil to the _______. | left |
| A ________________________________ is a graphic portrayal showing how a change in the amount of a single variable input affects total output. | production function |
| Economists focus on the ________ run, a production period so short that only variable inputs (usually labor) can be changed, whereas in the ___________ run a firm can change all of its productive resources, including capital. | short; long |
| __________ product is the total output or production by a firm and ________________ product is the extra output due to the addition of one more unit of output. | Total; marginal |
| _________________ marginal returns is the phase in which the marginal product of each additional worker increases. | Increasing |
| _________________ marginal returns is the phase in which output increases at a decreasing rate as more units of variable input are added. | Diminishing |
| _________________ marginal returns is the phase of production where marginal product of each additional worker is negative. | Negative |
| A _____________ cost is one that does not change in the short run, no matter how much output is produced and is sometimes called _________________. | fixed; overhead |
| __________________ cost changes with the amount of output produced and may include wages paid to labor, payment for natural resources, etc. | Variable |
| __________________ cost is the sum of fixed cost and variable cost (TC = FC + VC). | Total |
| __________________ cost is the extra cost of producing one additional unit of production. | Marginal |
| Total ________________ is the total amount earned by a firm from the sale of its products and is calculated by multiplying average ______________ by quantity. | revenue; price |
| _____________________ revenue is the change in total revenue from selling one additional unit of output. | Marginal |
| Profit-maximizing quantity of output occurs at the level of production where ______________________ is equal to __________________________ (MR =MC). | marginal revenue; marginal cost |
| The firm needs to find its _______________________________ the level of production that generates just enough revenue to cover its total operating cost (TR = TC). | break-even point |
Created by:
teacherdavidfrost
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