Term
What is a fixed cost? Give one example. |
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Definition
| It is a cost that does not change output/production. An example would be a manager. |
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Term
| What causes a change in quantity supplied? How is it shown on a supply graph? |
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Definition
| Change in Price / Shift on the curve, either right/left. |
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Term
| What is Marginal Revenue? |
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Definition
| Additional revenue that is received from another additional unit of product. |
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Term
| What are the 3 stages of Marginal Returns (Hint: It is on a graph) Explain Each. |
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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. |
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Term
| How does market entry effect supply? |
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Definition
| More people in the market, the more supplies will be made. |
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Term
| How does a firm determine output? |
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Definition
| Marginal Cost = Marginal Revenue |
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Term
| How is a change in supply shown on a graph? |
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Definition
| On a supply graph--a change in supply is shown by a shift in the supply line. |
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Term
| What kind of mathematical relationship exists betweeen price and quantity supplied? |
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Definition
| Directly proportional. They both go up/down together. |
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Term
| What is meant by elasticity of supply? What factor/factors determine elasticity and how does each influence elasticity of supply? |
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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. |
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Term
| Define Marginal Product of Labor. |
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Definition
| How much does an additional worker add to the output. |
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Term
| Define and give an example of Variable Costs. |
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Definition
| Variable costs will change w/ production. Ex: Employees in a workplace. |
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Term
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Definition
| The costs of fixed + variable costs added together. |
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Term
| At what point would a firm determine that it is preferable to shut down rather than produce? |
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Definition
| When their revenue does not cover the costs. |
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Term
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Definition
Additional cost from producing an additional unit of product. |
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Term
| What are the determinates of a change in supply? Explain how each effects supply. |
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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. |
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Term
| Event: A new tax is impose on producers. |
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Definition
| Determinant: Change in government action. Shift left/decrease supply. |
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Term
| Event: The price of fuel rises. |
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Definition
| Determinant: Change in cost of inputs. Decrease/shift left. |
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Term
| Event: The price of gloves rises. |
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Definition
| Determinant: Change in # of suppliers. Less supply if there are more prices. Shift left/decrease. |
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Term
| Event: Producers expect prices to fall next week. |
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Definition
| Determinant: Change in costs of inputs. Increase demand, so increase supply. Shift to the right/increase. |
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