LS9 - Supply Flashcards
What is revenue?
The income that a government or company receives
What is supply?
The quantity of a good or service that firms are willing to sell sr w given price over a given time period
What is the law of supply?
Ceteris Paribus, as the price of a good increases, quantity supplied decreases, while if the price of a good decreases, quantity supplied decreases
What is a raw material?
Any material in its natural condition before it has been processed for use
How do you calculate total revenue?
Price * quantity supplied
How does an increase in price affect supply?
There is an extension / expansion in supply
How does a decrease in price affect supply?
There is a contraction in supply
How would you represent a change in price on a supply curve?
Movement along the supply curve
How would you represent the a change in the quantity supplied on a supply curve?
A shift
Why does the supply curve move upwards and right?
Because price and quantity supplied are proportional
What conditions can affect supply?
Changes in production, improvements in innovation, number of firms, weather conditions, changes in the prices of related goods, firm expectations about future prices, government legislation
How does new technology affect supply?
It would decrease prices and increase quantity supplied as there will be lower production costs and better productivity
What is producer surplus?
The difference between the market price that firms receive and the price at which they are prepared to supply
What does the term “short run” refer to?
The period of time where at least one factor input to the production process can be varied
What does the term “long run” refer to?
A period of time where all factor inputs remain varied but the state of technology remains constant
