1. Costs of Production and Changes in Supply

2. Labor and Output Marginal product of labor- change in output from hiring one more worker. Marginal product of labor- change in output from hiring one more worker. Increasing Marginal Returns- where workers add more to output than previous worker. Increasing Marginal Returns- where workers add more to output than previous worker. Diminishing Marginal Returns- point where adding more workers increases total output but at a decreasing rate. Diminishing Marginal Returns- point where adding more workers increases total output but at a decreasing rate. Negative Marginal Returns- point where adding another worker DECREASES output. Negative Marginal Returns- point where adding another worker DECREASES output.

3. Costs Fixed Cost- Cost that doesn’t change, no matter how much of a good is produced Fixed Cost- Cost that doesn’t change, no matter how much of a good is produced Rent, machine repairs. Rent, machine repairs. Variable Cost- Costs that rise or fall depending on the quantity produced. Variable Cost- Costs that rise or fall depending on the quantity produced. Raw materials, labor Raw materials, labor TOTAL COST= Fixed costs + Variable costs TOTAL COST= Fixed costs + Variable costs

4. You want to produce where Marginal Revenue=Marginal Cost. You want to produce where Marginal Revenue=Marginal Cost. Profit= total revenue-total cost. Profit= total revenue-total cost.

5. SHIFTS IN SUPPLY Input costs Input costs Government’s influence Government’s influence Supply in Global Economy Supply in Global Economy Others Others

6. Input Costs Costs Costs As costs go up, supply shifts left As costs go up, supply shifts left As costs go down, supply shifts right As costs go down, supply shifts right Technology Technology Advances in technology, supply shifts right Advances in technology, supply shifts right Decreases in technology, supply shifts left Decreases in technology, supply shifts left

7. Governments influence Subsidy- government payment that supports a business or market. Subsidy- government payment that supports a business or market. FARM SUBSIDIES FARM SUBSIDIES Increase- supply shifts right Increase- supply shifts right Decrease- supply shifts left Decrease- supply shifts left Excise tax- tax on production or sale of a good. Excise tax- tax on production or sale of a good. Increase costs- Like cigarettes, alcohol. Increase costs- Like cigarettes, alcohol. Increase- supply shifts left Increase- supply shifts left Decrease- supply shifts right. Decrease- supply shifts right.

8. Governments influence Regulation- government intervention in a market that affects the price, quantity, or quality of a good. Regulation- government intervention in a market that affects the price, quantity, or quality of a good. Increase in regulation- supply shifts left Increase in regulation- supply shifts left Decrease in regulation- supply shifts right. Decrease in regulation- supply shifts right.

9. Supply in Global Economy Import restrictions- Import restrictions- Import restrictions- supply shifts left Import restrictions- supply shifts left None- Supply shifts right. None- Supply shifts right.

10. Others!! Future expectations of price- Future expectations of price- Expect higher prices in future- current supply shift left Expect higher prices in future- current supply shift left Expect lower prices in future- current supply shifts right. Expect lower prices in future- current supply shifts right. Number of suppliers- Number of suppliers- MORE- supply shifts right MORE- supply shifts right LESS- supply shifts left. LESS- supply shifts left.