Ch 5 - Supply
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Last updated 12:21 PM on 1/2/23
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24 Terms
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Competition
________: if another product is produced with higher profit, supply for existing product decreases.
2
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Variable factor
________: employment increases as output increases.
3
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Supply curve
________: represents the relationship between the price and the quantity supplied of a product.
4
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Total product
________: total output that a firm producers using variable and fixed factors in a given time period.
5
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**Supply**
the quantity of a good or service that producers are willing and able to supply at different prices in a given time period
6
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**Law of supply**
as the price of a product rises, the quantity supplied of the product will eventually increase
7
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\n **Supply curve**
represents the relationship between the price and the quantity supplied of a product
8
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**Non-price determinants of supply**
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Changes in factors of production: (supply shifts to left) → land, labour, capital, entrepreneurship
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Expectations
supply increases if product is expected to gain profit
10
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Competition
if another product is produced with higher profit, supply for existing product decreases
11
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**The law of diminishing marginal returns**
as more variable factors are added to a given quantity fixed factors, holding tech constant, marginal product eventually drops
12
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**Fixed factor**
employment remains constant
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**Variable factor**
employment increases as output increases
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14
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Total product
total output that a firm producers using variable and fixed factors in a given time period
15
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Marginal product
change in total product as a result of change in input
16
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Supply
the quantity of a good or service that producers are willing and able to supply at different prices in a given time period
17
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Law of supply
as the price of a product rises, the quantity supplied of the product will eventually increase
18
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Expectations
supply increases if product is expected to gain profit
19
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The law of diminishing marginal returns
as more variable factors are added to a given quantity fixed factors, holding tech constant, marginal product eventually drops
20
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Fixed factor
employment remains constant
21
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Short run
period with fixed + variable factors
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Long run
period when all factors are variable
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Total product
total output that a firm producers using variable and fixed factors in a given time period
24
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Average product
output that is produced, an average, by each unit of the variable factor
