supply vocab

Law of Supply

Economic rule stating that price and quantity supplied move in the same

direction. There is a positive relationship between price of a good and the quantity

producers are willing to provide. (Suppliers will normally oCer more for sale at higher prices

and less at lower prices.)

Supply

The amount of a product that would be offered for sale at all possible prices that

could prevail in the market. (Relationship between prices and quantities that producers

are willing to sell.)

Quantity Supplied

The amount of a good or service that a producer is willing and able to supply at a specific price. (The amount that producers bring to market at any given price.)

Marginal Opportunity Cost

Additional cost of producing one more unit of a good measured

by the units of another good sacrificed.

Supply Schedule

A table that displays the precise quantity of a good/service a producer is

willing and able to sell at various prices during a specific period.

Supply Curve (a/k/a Normal Curve)

A graph that displays the precise quantity of a good/service a producer is willing and able to sell at various prices during a specific period.

Market Supply Schedule

A table that displays the total quantity of a good/service that all

producers are willing and able to sell at various prices during a specific period.

Price Floor

A legal minimum price below which a good or service may not be sold.

Price Ceiling

A legal maximum price that may be charged for a particular good or service.

Black Market

Economic activity that takes place outside government-sanctioned channels

or "underground".

Surplus

Situation in which quantity supplied is greater than quantity demanded at the

current price.

Rationing

The distribution of goods and services based on something other than price.

Law of Diminishing Returns

Adding units of one factor of production increases total output, but after a certain point the extra factor for each additional unit hired will begin to decrease.

Equilibrium Price

The price at which the amount producers are willing to supply is equal to

the amount consumers are willing to buy.

Shortage

Situation in which the quantity demanded is greater than the quantity supplied.

Subsidies

Payments from the government to private businesses to ensure an affordable supply of some essential goods (ie, dairy, wheat, etc.).

Elasticity of Supply

A measure or degree of how responsive the quantity supplied of a good is to a change in its price. (The degree to which price changes affect the quantity supplied.

Elastic Supply

When the quantity supplied of a good/service changes significantly in

response to a change in price

Inelastic Supply

When the quantity supplied of a good/service does not change (or has a very small change) in response to a change in price.