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Chapter 5 Supply
| Question | Answer |
|---|---|
| supply | amount of a product a producer or seller would be willing to offer for sale at all possible prices in a market at a given point in time |
| Law of Supplly | principle that more will be offered for sale at higher prices than at lower prices |
| supply schedule | a table showing the quantities that would be produced or offered for sale at each and every possible price in the market at a given point in time |
| supply curve | a graph that shows the quantities supplied at each and every possible price in the market |
| market supple curve | supple curve that shows the quantities offered at various prices by all firms that sell the same product in a given market |
| quantity supplied | specific amount offered for sale at a given price; point on the supply curve |
| change in quantity supplied | change in the amount offered for sale in response to a price change; movement along the supply curve |
| change in supply | different amounts offered for sale at each and every possible price in the market; shift of the supply curve |
| subsidy | government payment to encourage or protect a certain economic activity |
| supply elasticity | responsiveness of quantity supplied to a change in price |
| production function | graphic portrayal showing how a change in the amount of a single variable input affects total output |
| short run | production period so short that only variable inputs (usually labor) can be changed |
| long run | production period long enough to change amount of variable and fixed inputs used in production |
| total product | total output or production by a firm |
| marginal product | extra output due to the addition of one more unit of input |
| stages of production | phases of production that consist of increasing, decreasing, and negative returns |
| diminishing returns | stage of production where output increase at a decreasing rate as more unites of variable input are added |
| fixed costs | costs of production that do not change when output changes |
| overhead | broad category of fixed costs that includes interest, rent, taxes, and executive salaries |
| variable cost | production cost that varies as output changes; labor, energy, raw materials |
| total cost | sum of variable cost plus fixed costs; all costs associated with production |
| marginal cost | extra cost of producing one additional unit of production |
| average revenue | average price that every unit of output sells for |
| total revenue | total amount earned by a firm from the sale of its products; average price of a good solid times times the quantity sold |
| marginal revenue | extra revenue from the sale of one additional unit of output |
| profit-maximizing quantity of output | level of production where marginal cost is equal to marginal revenue |
| break-even point | production level where total cost equals total revenue; production needed if the firm is is to recover its costs |
| e-commerce | electronic business or exchange conducted over the internet |
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