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SPPLY CRDS 2020

Mr. Stickler's ECON. "Supply" Chapter Flashcards 2020

QuestionAnswer
What is the Law of Supply? This law states that suppliers will normally offer more products or services for sale at high prices & less at lower prices. (Pg. 117)
List the six (6) things that can cause a change in market supply curves. 1.) Cost of Resources, 2.) Productivity, 3.) Technology, 4.) Taxes & Subsidies, 5.) Expectations, 6.) Government Regulations. (Pgs. 120 - 123)
What does the term Supply Elasticity mean/ refer to? This term refers to "a measure of the way in which the quantity supplied responds to a change in price". (Pg. 124)
What is one (1) thing that can cause the elasticity of a producer's supply to be elastic? One (1) thing that can cause this is if the firm can adjust to new prices quickly. (Pg. 125)
What is one (1) thing that can cause the elasticity of a producer's supply to be inelastic? One (1) thing that can cause this is if the nature of production is such that adjustments take longer. (Pg. 125)
What is the difference between Total Product and Marginal Product? Total Product is the "total output produced by a firm" while Marginal Product is "the extra output or change in total product caused by adding one (1) more unit of variable input". (Pg. 129)
What is the difference between "Fixed Costs" and "Variable Costs"? Fixed Costs are "the costs an organization incurs even if there is little or no activity" while Variable Costs are "costs that change when the business's rate of operation or output changes". (Pg. 133)
Give one (1) example of a Fixed Cost and one (1) example of a Variable Cost. One (1) example of a Fixed Cost is a business's rent or mortgage payment on the building & land that they use for operations. An example of a Variable Cost is the amount of the monthly electricity bill. (Pg. 133)
What is the difference between Total Cost and Marginal Cost? Total Cost is "the sum of the fixed and variable costs" while the Marginal Cost is "the extra cost incurred when producing one more unit of output." (Pg. 134)
What does the term Marginal Analysis mean/ refer to? This term refers to "a type of decision making that compares the extra benefits of an action to the extra costs of taking the action". (Pg. 137)
When does a business reach their Profit Maximizing Quantity of Output? Businesses reach this point when their Marginal Cost and Marginal Revenue are equal. (Pg. 137)
What does the term "fixed costs" mean/ refer to? This term relates to costs that a business must pay no matter how many products they make. It includes things like rent payments, mortgage payments, electricity and other utility bills, etc. The costs must be paid - even if we make no products that day.
What does the term "variable costs" mean/refer to? This term relates to costs that businesses pay that change depending on how many products they make. EX: If a restaurant makes more pizzas than usual, they need to order more pizza ingredients than usual.
What is the difference between a change in supply versus a change in quantity supplied? A change in quantity supplied is the change in amount offered for sale in response to a change in price. A change in supply is a situation (other than price changes) where suppliers offer different amounts of products at all possible market prices.
What is a general rule that we can say about the relationship between price elasticity and buying habits of necessities (i.e. things that people have to have such as food/groceries)? In general, necessities tend to have lower price elasticity of demand because we have to have them. Price changes won't effect consumer's buying habits much where necessities are concerned. (Class notes.)
How do we find the Total Costs of a business? We find this by adding the Fixed Costs and the Variable Costs. (Pgs. 133 & 134)
How do we find the Total Revenue of a business? We find this by multiplying the average per unit price by the number of units (i.e. individual products) that we sell. (Pg. 136)
How do we find the Marginal Revenue of a business? We find this by dividing the change in total revenue by the Marginal Product. (Pg. 136)
What does the term "Diminishing Returns" mean/ refer to? This term refers to "the stage of production where output increases at a diminishing rate as more variable inputs are added". (Pg. 130)
What does the term "Subsidy" mean/ refer to? This term refers to "a government payment to an individual, business, or other group to encourage or protect a certain type of economic activity". (Pg. 122)
What does a "Supply Curve" show us? This shows us the various quantities supplied at all possible prices that might prevail in the market at any given time. (Pg. 118)
What does a "Supply Schedule" show us? This "lists the various quantities of a particular product supplied at all possible prices in the market". (Pg. 118)
What does the "price coefficient of supply" tell us? This tells us the lowest dollar amount that a producer is willing to accept for a good or goods. In other words, this is the lowest price in which producers are willing and able to enter the market for a particular good.
What does the term "inelastic" mean/ refer to? This term related to the answer we get for "supply elasticity" problems and it means that a given change in price causes a relatively smaller change in the quantity supplied". (Price change causes a smaller change in quantity supplied.)
What does the term "elastic" mean/ refer to? This term related to the answer we get for "supply elasticity" problems and it means that a change in price causes a proportionally larger change in quantity supplied". (Price change results in larger change in quantity supplied.)
What does the term "unit elastic" mean/ refer to? This term related to the answer we get for "supply elasticity" problems and it means that a change in price causes a proportional change in quantity supplied". (Both change at the same rate.)
List the three (3) Stages of Production. 1.) Increasing Marginal Returns; 2.) Decreasing Marginal Returns; 3.) Negative Marginal Returns.
What is another name for "fixed costs"? Another name for this is "overhead".
What does the term "Marginal Cost" mean/ refer to? This term refers to "the extra cost incurred when producing one more unit of output".
How do businesses use "Marginal Analysis" to maximize profits? Businesses know that they have reached the maximum level of profits when "marginal cost" and "marginal revenue" are equal.
What is the difference between "break-even output" and "profit-maximizing quantity of output"? "Break-even point" is the production level where "total cost" equals "total revenue"; but profit-maximizing quantity of output is the production level where "marginal cost" equals "marginal revenue".
What does the term "short run" mean/ refer to? This term refers to "a period so brief that only the amount of the variable input can be changed".
What does the term "long run" mean/ refer to? This term refers to "a period long enough for a firm to adjust the quantities of all productive resources, including capital".
What does the term "variable input" mean/ refer to? This term refers to "An input whose quantity can be changed in the time period under consideration".
What is one (1) common example of "variable input"? One (1) common example of this is labor.
Created by: sticklerpjpII
 

 



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