What’s Happening with Supply. Chapter 5 Test Review - Economics

and ability to sell a product Willingness and ability to sell a product at a given price Supply

Less quantity is offered for sale when prices are low More quantity is offered for sale when prices are high Less quantity is offered for sale when prices are low Law of Supply

Caused by a price change Movement along a stable supply curve Caused by a price change Change in Quantity Supplied

Amount offered for sale at all prices Shown by a shift of a supply curve Change in Supply

NICEPP or factors that cause a Change in Supply Natural/Manmade, input cost, competition, future expectations, profitability of alternate products and by products. Shifts the entire supply curve NICEPP or factors that cause a Change in Supply

Increase in Supply P S S1 p p1 D Q q q1 S  .: P ↓ & Q ↑

Decrease in Supply S1 P S p1 p D Q q1 q S  .: P↑ & Q↓

When supply increases: The supply curve shifts_____. rightward Equilibrium price ______ decreases Equilibrium quantity ______ increases

Increase in Supply P S S1 p p1 D Q q q1 S  .: P ↓ & Q ↑

When supply decreases: The supply curve shifts_____. leftward Equilibrium price ______ increases Equilibrium quantity ______ decreases

Decrease in Supply S1 P S p1 p D Q q1 q S  .: P↑ & Q↓

Change in Quantity Supplied. Which one of these involves movement along a stable supply curve caused by a change in price only? Change in Supply or Change in Quantity Supplied? Change in Quantity Supplied.

A production period long enough to change the amount of both variable and fixed input costs used in producing products. Long Run

The responsiveness of quantity supplied to a price change. Supply Elasticity

This is found by adding together all variable and fixed costs associated with production. Total Cost

The broad category of fixed costs that includes interest paid on loans, rent, taxes, and executive salaries. Overhead

The extra revenue (money) from the sale of one more unit of output. Marginal Revenue

A government payment to a producer (supplier of products) to encourage or protect certain economic activity. Subsidy

Electronic business or exchange conducted over the internet. E-Commerce

A production period so short that only variable inputs (usually costs like labor) can be changed. Short Run

What does marginal mean in economics? Next Unit. For example: Marginal Cost, Marginal Revenue, or Marginal Product.

The extra output due to the addition of one more unit of input (like a worker or labor). Marginal Output

The costs of production that do not change when output changes. Fixed Costs

A graphic portrayal showing a change in the amount of a single variable input (or cost) affects total output. Production Function

The extra-cost of producing one additional unit of output.. Marginal Cost

The production cost that varies as output changes. Variable Costs

Profit Maximizing Quantity of Output The level of production where marginal cost is equal to marginal revenue. Profit Maximizing Quantity of Output

The total output or production by a firm (company). Total Product

The average price that every unit of output sells for. Average Revenue

The total amount earned by a company (a firm) from the sale of products. It is the average price of a good times the quantity sold. Total Revenue

The stage of production where output increases at a decreasing rate as more units of inputs of variable inputs are added. Diminishing Returns

The phases or stages of production that consist of increasing, decreasing, and negative returns.

The production level where total costs equals total revenue The production level where total costs equals total revenue. It is the production level needed if the company is to recover its costs. Break-Even Point