Law of Supply Test

Law of Supply

When prices go up, sellers want to sell more; when prices go down, they want to sell less

Subsidy

Money the government gives to help a business or industry

Black market

Where people buy and sell goods illegally, usually to avoid rules or high prices.

Fixed costs

Costs that stays the same no matter how much is made (like rent)

Variable costs

Costs thatchange depending on how much is made (like materials).

Total costs

Costs added together

How to calculate total costs

Add the fixed costs and variable costs together: (Fixed costs + Variable costs)

Elasticity of supply

Shows how much the amount supplied changes when the price changes.

How to determine elasticity of supply (time)

If it's easy and quick to make more of a product, supply is elastic. If it takes a long time, supply is inelastic

Diminishing returns

When adding more workers or resources gives less and less extra output.

How suppliers and consumers react to higher prices

Suppliers: Want to produce and sell more to make more money.

Consumers: Usually buy less because it costs more.