chapter 5

Question 1

principle that more will be offered for sale at higher prices than at lower prices.

Answer 1

Law of supply

Question 1

amount of a product a producer or seller would be willing to offer for sale at all possible
prices in a market at a given point in time.

Answer 1

Supply

Question 2

a table showing the quantities that would be produced or offered for sale at
each and every possible price in the market at a given point in time.

Answer 2

Supply schedule

Question 3

a graph that shows the quantities supplied at each and every possible price in the
market.

Answer 3

Supply curve

Question 4

specific amount offered for sale at a given price; point on the supply curve.

Answer 4

Quantity Supplied

Question 5

different amongst offered for sale at each and every possible price in the
market; shift of the supply curve.

Answer 5

Change in supply

Question 6

responsiveness of quantity supplied to a change in price.

Answer 6

Supply Elasticity

Question 7

graphic portrayal showing how a change in the amount of a single variable
input affects total output.

Answer 7

Production Function

Question 8

production period so short that only variable inputs (usually labor) can be changed.

Answer 8

Short run

Question 9

production period long enough to change the amount of variable and fixed inputs used
in production.

Answer 9

Long run

Question 10

total output or production by a firm.

Answer 10

Total product

Question 11

extra output due to the addition of one more unit of input.

Answer 11

Marginal Product

Question 12

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

Answer 12

Stages of production

Question 13

stage of production where output increases at a decreasing rate as more
units of variable input are added.

Answer 13

Diminishing Returns

Question 14

costs of production that do not change when output changes.

Answer 14

Fixed costs

Question 15

broad category of fixed costs that includes interest, rent, taxes, and executive salaries.

Answer 15

Overhead

Question 16

production cost that varies as output changes; labor, energy, raw materials.

Answer 16

Variable cost

Question 17

extra cost of producing one additional unit of production.

Answer 17

Marginal cost

Question 18

level of production where marginal cost is equal to
marginal revenue.

Answer 18

Profit-Maximizing Quantity of Output

Question 19

production level where total cost equals total revenue; production needed if the
firm is to recover its costs.

Answer 19

Break-Even Point

Question 20

Combination of quantities that someone
would be willing and able to buy over a
range of possible prices at a given
moment.

Answer 20

Demand

Question 21

Branch of economic theory that deals
with behavior and decision making by
small units such as individuals and firms.

Answer 21

MICROECONOMICS

Question 22

Graph showing the quantity demanded at each and every possible price that might prevail in the market at a given time

Answer 22

Demand curve

Question 23

Rule stating that more will be demanded at lower prices and less at higher prices, an inverse relationship between price and quantity demanded

Answer 23

Law of Demand

Question 24

Additional satisfaction or usefulness obtained from acquiring or consuming one more unit of a product.

Answer 24

Marginal Utility

Question 25

Decrease in additional satisfaction or usefulness as additional units of a product are acquired.

Answer 25

DIMINISHING MARGINAL UTILITY

Question 26

movement along the demand curve showing that a different quantity is purchased in response to a change in price.

Answer 26

Change in Quantity Demanded

Question 27

That portion of a change in quantity demanded caused by a change in a consumers income when the price of a product changes.

Answer 27

Income effect

Question 28

The portion of a change in quantity demanded that is due to a change in the relative price of the good.

Answer 28

SUBSTITUTION EFFECT

Question 29

different amounts of a product are demanded at every price, causing the demand curve to shift to the left or to the right.

Answer 29

Change in Demand

Question 30

Competing products that can be used in place of one another; products related in such a way that an increase in the price of one increases the demand for the other.

Answer 30

SUBSTITUTES

Question 31

Products that increase the use of other products; products related in such a way that an increase in the price of one reduces the demand for both.

Answer 31

Compliments

Question 32

A measure of responsiveness that tells us how a dependent variable, such as quantity demanded or quantity supplied, responds to a change in an independent variable such as price.

Answer 32

Elasticity

Question 33

The extent to which a change in price causes a change in the quantity demanded; demand elasticity has three cases; elastic, inelastic, or unit elastic.

Answer 33

DEMAND ELASTICITY

Question 34

Type of elasticity in which a change in the independent variable (usually price) results in a larger change in the dependent variable (usually quantity demanded or supplied).

Answer 34

Elastic

Question 35

Case of demand elasticity where the percentage change in the independent variable (usually price) causes a less than proportionate change in the dependent variable (usually quantity demanded or supplied).

Answer 35

Inelastic

Question 36

elasticity where a change in the independent variable (usually price) generates a proportional change of the dependent variable (quantity demanded or supplied).

Answer 36

Unit Elastic

Question 37

As price increase, As price decreases

Answer 37

demand decreases demand increases

Question 38

A product’s ___ motivates a consumer to demand more of the product.

Answer 38

marginal utility

Question 39

Substitute examples

Answer 39

Sweats and leggings Milk and almond milk butter and margarine

Question 40

Complements

Answer 40

Cell phone and charger Burgers and buns Socks and shoes

Question 41

Inelastic demand example

Answer 41

Medicine

Question 42

Determinants of Elasticity

Answer 42

Can purchase be delayed? Are adequate substitutes available? Does purchase use a large portion of income?

Question 43

The supply curve slopes in the ___ direction of the demand curve.

Answer 43

opposite

Question 44

A change in quantity supplied is caused by a change in the

Answer 44

price of a product

Question 45

When the cost of resources decreases, When the cost of resources increases,

Answer 45

supply increases Supply decreases

Question 46

The use of the production function is important to business because it allows businesses to gauge whether

Answer 46

additional input will result in extra output.

Question 47

Stages of production

Answer 47

Increasing Marginal Returns Decreasing Marginal Returns Negative Marginal Returns

Question 48

Costs that affect a business's production decisions

Answer 48

fixed cost variable cost total cost marginal cost