# Shared Flashcard Set

## Details

Chapter 5: Supply
N/A
19
Economics
10/01/2008

Term
 What is a fixed cost? Give one example.
Definition
 It is a cost that does not change output/production. An example would be a manager.
Term
 What causes a change in quantity supplied? How is it shown on a supply graph?
Definition
 Change in Price / Shift on the curve, either right/left.
Term
 What is Marginal Revenue?
Definition
Term
 What are the 3 stages of Marginal Returns (Hint: It is on a graph) Explain Each.
Definition
 Positive Returns, Decreasing Returns, Negative Returns; Positive returns are increasing, decreasing returns are where a business can still operate, but its returns are decreasing, and Negative returns are where no return is being made at all.
Term
 How does market entry effect supply?
Definition
 More people in the market, the more supplies will be made.
Term
 How does a firm determine output?
Definition
 Marginal Cost = Marginal Revenue
Term
 How is a change in supply shown on a graph?
Definition
 On a supply graph--a change in supply is shown by a shift in the supply line.
Term
 What kind of mathematical relationship exists betweeen price and quantity supplied?
Definition
 Directly proportional. They both go up/down together.
Term
 What is meant by elasticity of supply? What factor/factors determine elasticity and how does each influence elasticity of supply?
Definition
 How sensitive consumers are to a change in price. Time is the factor that influences elasticity. If it is > 1 = elastic, < 1 = inelastic. The more time, the more elastic producers can be, and less elastic w/ less time.
Term
 Define Marginal Product of Labor.
Definition
Term
 Define and give an example of Variable Costs.
Definition
 Variable costs will change w/ production. Ex: Employees in a workplace.
Term
 Define Total Cost.
Definition
 The costs of fixed + variable costs added together.
Term
 At what point would a firm determine that it is preferable to shut down rather than produce?
Definition
 When their revenue does not cover the costs.
Term
 Define Marginal Cost.
Definition
Term
 What are the determinates of a change in supply? Explain how each effects supply.
Definition
 1.) Change in # of suppliers - if more suppliers, more supplies, less suppliers, less suplies. 2.) Change in cost of inputs - cost of inputs goes up, it reduces supply and there is a shift either R/L 3.) Change in Technology - Usually makes things more efficent, and it can cause a shift to the right if the technology makes whatever it is more productable. 4.) Government Action - Government can increase taxes, reduce supply, or subsidize and increase supply, and etc. 5.) Change in price of related goods - If the price of another good is lower, consumers are more likely to go to it, and that would cause an increase in demand for the first good.
Term
 Event: A new tax is impose on producers.
Definition
 Determinant: Change in government action. Shift left/decrease supply.
Term
 Event: The price of fuel rises.
Definition
 Determinant: Change in cost of inputs. Decrease/shift left.
Term
 Event: The price of gloves rises.
Definition
 Determinant: Change in # of suppliers. Less supply if there are more prices. Shift left/decrease.
Term
 Event: Producers expect prices to fall next week.
Definition
 Determinant: Change in costs of inputs. Increase demand, so increase supply. Shift to the right/increase.
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