Chapter 3: Supply and Producer Choice

These flashcards cover key concepts from Chapter 3 regarding supply and producer choice, focusing on definitions and important principles relevant to individual and market supply.

Individual Supply Curve

A graph plotting the quantity of an item that a business plans to sell at each price.

Ceteris Paribus

A Latin phrase meaning 'holding other things constant' used in economics to isolate the effect of one variable.

Law of Supply

The tendency for quantity supplied to be higher when the price is higher.

Perfectly Competitive Market

A market where all firms sell an identical good, and there are many buyers and sellers, each of whom is small relative to the size of the market.

Marginal Costs

Costs that vary with the quantity of output produced, including costs like labor and raw materials.

Shift in Supply Curve

A movement of the entire supply curve either to the right (increase in supply) or to the left (decrease in supply) due to factors other than price.

Diminishing Marginal Product

The decrease in additional output gained from increasing the quantity of a variable input, while keeping other inputs fixed.

Market Supply Curve

A graph plotting the total quantity of an item supplied by the entire market at each price.

Input Prices

Prices of the resources used in the production process that can affect supply.

Expectations (in Supply)

The anticipation of future prices that can influence current supply decisions.