1. Supply Review
Economics
Mr. Bordelon

2. Key Terms
An expense that costs the same whether or not a firm is producing a good or service.

3. Key Terms
An expense that costs the same whether or not a firm is producing a good or service.
Fixed cost

4. Key Terms
The income that the supplier receives from selling one more unit.

5. Key Terms
The income that the supplier receives from selling one more unit.
Marginal revenue

6. Key Terms
A tax on the sale or manufacture of a good.

7. Key Terms
A tax on the sale or manufacture of a good.
Excise tax

8. Key Terms
A measure of how suppliers will respond to a change in price.

9. Key Terms
A measure of how suppliers will respond to a change in price.
Elasticity of supply

10. Key Terms
A government payment to support a business or market.

11. Key Terms A government payment to support a business or market.
Subsidy

12. Key Terms
The tendency of suppliers to offer more of a good at a higher price.

13. Key Terms
The tendency of suppliers to offer more of a good at a higher price.
Law of supply

14. Key Terms
The additional cost of producing one more unit of output.

15. Key Terms The additional cost of producing one more unit of output.
Marginal cost

16. Key Terms
Supply schedule
Regulation
Variable costs

17. Main Ideas
How does the marginal product of labor change as more people are hired?

18. Main Ideas
How does the marginal product of labor change as more people are hired?
Marginal product of labor increases up to a certain point. Once that point is reached, however, total output still increases, but at a decreasing rate. Diminishing returns.

19. Main Idea
What categories of costs combine to create a firm’s total cost?

20. Main Idea
What categories of costs combine to create a firm’s total cost?
Fixed costs and variable costs combine to create total cost. Fixed costs are costs that are the same no matter how much is produced. Variable costs rise or fall depending on the quantity produced.

21. Main Ideas
Name and describe three factors that can cause a change in supply.

22. Main Ideas
Name and describe three factors that can cause a change in supply.
Changes in input costs
Future expectations
Technological changes
Government subsidies, taxes, and regulations
Imports and exports

23. Main Idea
What circumstances cause a firm to experience diminishing marginal returns?

24. Main Idea
What circumstances cause a firm to experience diminishing marginal returns?
Diminishing marginal returns occur when output declines with each additional unit of labor. They generally result when the supply of capital does not increase with the work force, such as when there are not enough machines or tools or supplies for added workers to use.

25. Main Ideas
How can the global economy affect the supply of a good in the United States?

26. Main Ideas
How can the global economy affect the supply of a good in the United States?
Increases in wages, technological innovation, or trade restrictions will affect supply of goods to the United States.

27. Main Ideas
To maximize costs, marginal revenue should be equal to ______.

28. Main Ideas
To maximize costs, marginal revenue should be equal to marginal cost.

29. Critical Thinking
Assume that a $1 per pound tax has been placed on fish. What effect will this have on the supply curve for fish?

30. Critical Thinking
Assume that a $1 per pound tax has been placed on fish. What effect will this have on the supply curve for fish?
Supply curve will move to the left.

31. Critical Thinking
The local coffee shop on has the following expenses per month:
$5,000 rent
$3,000 manager
$4,000 part-time workers
$2,000 supplies
In July, the owner can expect to earn $7,000. If the store closes down, he won’t have to pay for part-time workers or supplies.
Should he close the shop down?

32. Critical Thinking Should he close the shop down?
No. Total revenue ($7,000) is greater than the cost of keeping the shop open ($6,000).

33. Compare
What is the difference between increasing marginal returns and diminishing marginal returns?

34. Compare
What is the difference between increasing marginal returns and diminishing marginal returns?
Increasing marginal returns occur when there is an investment in the business, and the marginal product of labor increases as the number of workers increases.
Diminishing marginal returns occur when there is an investment in the business, and the marginal product of labor decreases as the number of workers increases.

35. Problem Solving You open a t-shirt factory. What are your fixed costs?
What are your variable costs?
How would each of these costs affect the number of t- shirts you make?