Ch5

Question 1

Supply

Answer 1

The amount of a product that would be offered for sale at all possible prices on the market

Question 2

Law of supply

Answer 2

Principle states that suppliers will normally offer more product for sale at higher prices and less at lower

Question 3

Supply schedule

Answer 3

Listing of various quantities of a particular product supplied at all possible prices in the market

Question 4

Supply curve

Answer 4

Graph showing various quantities supplied at each price in the market

Question 5

Market supply curve

Answer 5

Shows the quantities offered at various prices by all firms that offer the product for sale In the market

Question 6

Quantity supplied

Answer 6

Amount that producers bring to the market at any price

Question 7

Change in quantity supplied

Answer 7

Change in the amount offered for sale in response to a change in price

Question 8

Change in supply

Answer 8

Situation where suppliers offer different amounts of a product for sale at all possible prices

Question 9

Elasticity of supply

Answer 9

Measure of the way in which quantity supplied responds to a change in price

Question 10

Elasticity

Answer 10

A measure of the way quantity adjusts to a change in price

Question 11

Elastic supply

Answer 11

Change in price = large change in quantity supplied

Question 12

Inelastic supply

Answer 12

Change in price = small change in quantity supplied

Question 13

Unit elastic supply

Answer 13

Change in price = proportional change in quantity supplied

Question 14

Theory of production

Answer 14

The relationship between the factors of production and the output of good

Question 15

Law of variable proportions

Answer 15

Output will change as one input changes while the others are held constant

Question 16

Production function

Answer 16

Concept describes relationship between changes in output to different amounts of a single input while other inputs are held constant

Question 17

Total product

Answer 17

Total output produced by the firm

Question 18

Marginal product

Answer 18

Extra output or change in total product cause by the addition of one or more unit of variable product

Question 19

Increasing returns

Answer 19

Output increases with the addition of each input of labor

Question 20

Diminishing returns

Answer 20

Stage where output increases at a diminishing rate as more units are added

Question 21

Negative returns

Answer 21

Stage where the firm has hired too many workers

Question 22

Fixed costs

Answer 22

Cost that a business incurs even if the plant is idle and output is zero
Usually machines and capital goods

Question 23

Overheard

Answer 23

Total fixed cost or fixed cost of operation

Total operating expenses of a business

Question 24

Variable cost

Answer 24

Cost that changes when the business rate of operation or output changes
Labor and raw materials

Question 25

Total cost

Answer 25

Sum of the fixed and variable cost

Question 26

Marginal cost

Answer 26

Extra cost incurred when a business produces one additional unit of a product

Question 27

Total revenue

Answer 27

Number of units sold multiplied by average prices per unit

Question 28

Marginal revenue

Answer 28

Extra revenue associated with the production and sale of one additions unit of output

Question 29

Finding marginal revenue

Answer 29

Divide total revenue by the marginal product

Question 30

Marginal analysis

Answer 30

Type of cost benefit decision making that compares the extra benefits to the extra costs of an action

Question 31

Break even point

Answer 31

Total output or total product that a business needs to sell in order to cover its total cost

Question 32

Profit maximizing quantity of output

Answer 32

Reached when marginal cost and marginal revenue are equal