Studied by 3 people
Looks like no one added any tags here yet for you.
One of the main reasons people go into business is to make a _________
profit
Terms: profit
the total revenue a firm receives from selling its product minus the total cost of producing it
Usually the ______ you supply the more profit you can make
more
Terms: quantity supplied
the amount of a good that firms are willing to supply at a particular price over a given period of time
With demand you think like a ________
consumer
With supply you need to think like a _______
producer
So the ________ the price the more a producer is willing to supply because they can make a higher ________.
higher, profit
What is the law of supply?
When price goes up, supply goes up
When price goes down, supply goes down
Supply and price has a _______ relationship since they move in the same direction
positive
Terms: supply schedule
a table list the quantity of the good that will be supplied a specified prices
Terms: supply curve
a graphical representation of the supply schedule, showing the quantity the firm will supply at each price
Terms: market supply curve
a graphical representation of the quantity supplied at various prices by all firms
Terms: perfect competition
when there are many firms selling identical good, firms are free to enter and exit the market, and consumers have full information about the price and availability of goods
What are 4 conditions of perfect competition?
1) every unit of the good sold in the market is identical
2) the good is produced by many firms (none are large enough to influence the price of the good)
3) new firms that want to supply the good are free to enter the market and existing firms are free to stop supplying the good
4) consumers are aware of the price charged by the various firms and have the opportunity to buy from the firm of their choosing
Terms: elasticity of supply
measure of the responsiveness of the quantity supplied to price changed
Terms: elastic
supply is very sensitive to price change
Terms: inelastic
supply is not very sensitive to price change
What is the law of demand
Price goes up, demand goes down
Price goes down, demand goes up
Demand and price have a _____ relationship since they move in opposite directions.
negative
When there is a price change there will be _______ on the graph
movement
When there is not a change in price there will be a ________ on the graph
shift
If demand decreases without a price change the curve will shift to the ______
left
If demand increases without a price change the curve will shift to the ______
right
What are 5 factors that could cause a shift in demand?
taste, income, price of related goods, expectations, number of buyers
Terms: Shift of the supply curve
the result of a change in the quantity supplied
Terms: Change in supply
when the supply curve shift (price stayed the same, but more or less of the product is supplied)
Terms: Change in the quantity supplied
when there is movement along the suppl curve (movement means the price changed)
A decrease in supply the curve will shift to the ______
left
A increase in supply, the curve will shift to the ______
right
What are 6 factors that could cause a shift in the supply curve
1) the cost of inputs
2) government policies
3) number of firms
4) technological change
5) natural disasters and weather
6) expectations about future prices
Terms: inventory
consist of goods that are held in storage temporarily
Terms: fixed inputs
inputs that cannot be changed
Terms: variable inputs
inputs that can be changed
Terms: production schedule
indicated the inputs needed to produce different quantities of output
Terms: marginal product of labor
the amount by which total output increases when one more worker is hired
Terms: diminishing marginal productivity
describes the decrease in the marginal product of a variable input such as labor as more of it is combined with a fixed input such as equipment
Terms: law of diminishing returns
a general tendency for total output to increase at a decreasing rate when additional amounts of a input are used in production, holding the amount of other input
Terms: fixed cost
the cost of inputs that do not vary with the amount of output produced
What is an example of a fixed cost?
rent for a building
Terms: variable cost
the cost of inputs that do vary with the amount of output produced
What is an example of a variable cost?
wages for employees
Terms: total cost
fixed cost plus variable cost
Terms: marginal cost
the additional cost of doing something one more time
Terms: marginal revenue
the additional revenue a firm receives from selling another unit of output
