iTopic 3.4 - 3.6: Demand, Supply, and Prices

supply

the amount of a good or service that is available

law of supply

producers offer more of a good or service as its price increases and less as its price falls

quantity supplied

the amount of a good or service that a producer is willing and able to supply at a specific price

supply schedule

a chart that lists how much of a good or service a supplier will offer at various prices

variables

factors that can change

market supply schedule

a chart that lists how much of a good or service all suppliers will offer at various prices

supply curve

a graph of the quantity supplied of a good or service at various prices

market supply curve

a graph of the total quantity supplied of a good or service by all suppliers at various prices

elasticity of supply

a measure of the way quantity supplied reacts to a change in price

marginal product of labor

the change in output that results from hiring one additional unit of labor

increasing marginal returns

the level of production in which the marginal product of labor increases as the number of workers increases

diminishing marginal returns

the level of production in which the marginal product of labor decreases as the number or workers increases

negative marginal return

when the addition of a unit of labor actually reduces the total output

fixed cost

a cost that does not change no matter now much of a good or service is produced

variable costs

a cost that rises or falls depending on the quantity produced

total cost

the sum of fixed costs and variable costs

marginal cost

the extra cost of adding one unit

marginal revenue

the additional income from selling one more unit of a good or service; sometimes equal to price

average cost

total cost divided by quantity produced

operating cost

subsidy

a government payment that supports a business or market

excise tax

a tax on the production or sale of a good

regulation

Government intervention in a market that affects the production of a good