SUPPLY

luxury classic cars

Supply is inelastic for: ________, construction sites.

Law of Supply

________: as the price rises, the quantity supplied rises OR as the price falls, quantity supplied falls.

Marginal Revenue

________: PRICE of a widget.

Law of Supply

as the price rises, the quantity supplied rises OR as the price falls, quantity supplied falls

Law of Demand

price and quantity demanded share an inverse relationship

3 fixed costs

Rent, insurance, loan payments

3 variable costs

hourly labor, raw materials, bonuses

Total Cost

FC+VC

Marginal Cost

current TC-last TC

Average Total Cost

TC / TP

Total Revenue

MR x TP

Marginal Revenue

PRICE of a widget

Profit

TR-TC

Profit Maximizing Formula

MC=MR

Break-Even Point

TC=TR

Find Marginal product

How many more of a product are you making each time

7 determinants of supply

change in production cost, change in productivity, improvements in technology, changes in taxes or subsidies, cost in availability of raw materials, change in producer population, producer expectations

Shift right

increase in supply

Shift left

decrease in supply

****When the price of a good changes

the SUPPLY changes

Supply is elastic for

shoes, groceries

Supply is inelastic for

luxury/classic cars, construction sites

Characteristic of a good with inelastic supply

difficult or impossible to bring to the market quickly

A change in the price of a good

Shift along the curve