Chapter 5: Supply Section 1
|
|
- Terence Parker
- 6 years ago
- Views:
Transcription
1 Chapter 5: Supply Section 1
2 Key Terms supply: the amount of goods available law of supply: producers offer more of a good as its price increases and less as its price falls quantity supplied: the amount that a supplier is willing and able to supply at a specific price supply schedule: a chart that lists how much of a good a supplier will offer at various prices variable: a factor that can change
3 Key Terms, cont. market supply schedule: a chart that lists how much of a good all suppliers will offer at various prices supply curve: a graph of the quantity supplied of a good at various prices market supply curve: a graph of the quantity supplied of a good by all suppliers at various prices elasticity of supply: a measure of the way quantity supplied reacts to a change in price
4 Introduction How does the law of supply affect the quantity supplied? As prices rise, producers will offer more of a good and new suppliers will enter the market in the hopes of making a profit. The law of supply states that as prices rise, so will the quantity supplied.
5 The Law of Supply Supply is the amount of goods available. As the price of a good increases, producers will offer more of it and as the price decreases, they will offer less. The law of supply includes two movements: Individual firms changing their level of production Firms entering or exiting the market
6 What is the Law of Supply?
7 Higher Production If a firm is earning a profit from the sale of a good or service, then an increase in the price will, in turn, increase the firm s profits. In general, the search for profit drives the choices made by the producer.
8 Market Entry Checkpoint: Why do firms increase production when the price of a good goes up? Rising prices encourage new firms to join the market and will add to the quantity supplied of the good. Take, for example, the music market: When a particular type of music becomes popular, such as 70 s disco or 90 s grunge, more bands will play that type of music in order to profit from such music s popularity. This action reflects the law of supply.
9 The Supply Schedule Supply of a good can be measured using a supply schedule. A supply schedule shows the relationship between price and quantity supplied for a particular good. An individual supply schedule shows how much of a good a single supplier will be able to offer at various prices. A market supply schedule shows how much of a good all firms in a particular market can offer at various prices.
10 Supply Schedule The supply schedule lists how many slices of pizza one pizzeria will offer at different prices. The market supply schedule represents all suppliers in a market. What does the individual supply schedule tell you about the pizzeria owner s decisions? How does the market supply schedule compare to the individual supply schedule?
11 The Supply Graph A supply schedule can be represented graphically by plotting points on a supply curve. A supply curve always rises from left to right because higher prices leads to higher output. Checkpoint: What are the two variables represented in a supply schedule or supply curve?
12 Elasticity of Supply Elasticity of supply, based on the same concept of elasticity of demand, measures how firms will respond to changes in the price of a good. Elastic When elasticity is greater than one, supply is very sensitive to price changes Inelastic When elasticity is less than one, supply is not very responsive to price changes.
13 Elasticity in the Short Run In the short run, it is difficult for a firm to change its output level, so supply is inelastic. Many agricultural businesses, such as harvesting cranberries, have a hard time adjusting to price changes in the short term.
14 Elasticity in the Long Run In the long run, supply can become more elastic. Just like demand, supply becomes more elastic if the supplier has a longer time to respond to a price change.
15 Chapter 5: Supply Section 2
16 Key Terms marginal product of labor: the change in output from hiring one additional unit of labor increasing marginal returns: a level of production in which the marginal product of labor increases as the number of workers increases diminishing marginal returns: a level of production in which the marginal product of labor decreases as the number of workers increases fixed cost: a cost that does not change, no matter how much of a good is produced
17 Key Terms, cont. variable cost: a cost that rises and falls depending on the quantity produced total cost: the sum of fixed costs plus variable costs marginal cost: the cost of producing one more unit of a good marginal revenue: the additional income from selling one more unit of a good average cost: the total cost divided by the quantity produced operating cost: the cost of operating a facility
18 Labor and Output All business owners must decide how many workers they will hire. The addition of new workers will increase production until it reaches its peak, at which point, production actually decreases.
19 Marginal Returns The addition of more workers to a firm allow for a greater amount of specialization. Specialization increases the output and the firm enjoys increasing marginal returns.
20 Marginal Returns, cont. Eventually, though, the benefits of specialization end and the addition of more workers increases total output but at a diminishing rate. A firm with diminishing marginal returns will produce less and less output from each additional unit of labor. What is the marginal product of labor when the factory employs five workers?
21 Fixed Costs Production costs are divided into two categories - fixed costs and variable costs. Fixed costs mainly involve the production facility and include: Rent Machinery repair Property taxes Worker s salaries
22 Variable Costs Variable costs include: Price of raw materials Some labor Electricity and heating bills Fixed costs and variable costs are added together to find the total cost.
23 Marginal Cost of Production Knowing the total cost of several levels of output helps determine the marginal cost of production at each level, or the additional costs of producing one more unit. One way to find the best level of output is to figure out where marginal cost is equal to marginal revenue, or the additional income from selling one more unit of a good.
24 Setting Output A firm s primary goal is to maximize profits. The firm wants to make the most profit with the least amount of total production cost to the firm. Why is the marginal revenue always equal to $24?
25 Determining a Firm s Profit The graph to the right shows how a firm s profit per hour can be determined by subtracting total cost from total revenue. What would happen to output if market price fell to $20? Why would the firm increase output if the price of a beanbag rose to $37?
26 The Shutdown Decision What happens to a factory that starts to lose money? Sometimes, even though a factory is producing at its most profitable level, the market price is so low that the factory s total revenue is still less than its total cost. The factory owners have two choices: Continue to produce goods and lose money Shut down the factory
27 Option 1: Continue to Produce Checkpoint: When should a firm keep a money-losing factory open? The firm should keep the factory open if the total revenue from the goods is greater than the cost of keeping the factory open. This would work if the benefit of operating the factory is greater than the variable cost.
28 Option 2: Shut Down the Factory If a firm shuts the factory down it still has to pay all of its fixed costs so it would have money going out but nothing coming in. The firm would lose an amount equal to its fixed costs.
29 Chapter 5: Supply Section 3
30 Key Terms subsidy: a government payment that supports a business or market excise tax: a tax on the production or sale of a good regulations: government intervention in a market that affects the production of a good
31 Input Costs Any changes in the cost of an input used to make a good will affect supply. A rise in the cost of raw materials, for example, will result in a decrease in supply because the good has become more expensive to produce. The high input costs that dairy farmers pay for feed, labor, and fuel result in higher prices for milk and other dairy products.
32 Rising Costs and Technology If costs continue to rise, a firm will have to cut production and lower its marginal cost. It is possible for input costs to drop. In many industries, advances in technology can lower production costs. Examples of technology advances include: Automation Computers
33
34 Government s Influence In addition to input costs, the federal government also has the power to affect the supplies of many types of good. Subsidies The government often gives subsidies to the producers of a good. Subsidies generally lower cost, which allows a firm to produce more goods. Reasons for subsidizing products include: To provide for people during food shortages To protect young industries from foreign competition.
35 Government Influences, cont. Taxes Excise taxes increase production costs by adding an extra cost for each unit sold. They are sometimes used to discourage the sale of a good the government deems harmful, such as cigarettes and alcohol.
36 Government Influences, cont. Regulation Indirectly, government regulation often has the effect of raising costs. When the government regulated the auto industry to cut down on pollution, these regulations led to an increase in the cost of manufacturing cars.
37 Non-Price Influences Changes in the global economy Since many goods and services are imported, changes in other countries can affect the supply of those goods. An increase in wages in one country or the increased supply of a good in another will cause the overall supply curve to shift. Restrictions on imports also affect supply.
38 Shifts in the Supply Curve Factors that reduce supply shift the supply curve to the left, while factors that increase supply move the supply curve to the right. Which graph best represents the effects of higher costs? Which graph best represents advances in technology?
39 Future Expectations of Prices Checkpoint: What happens to supply if the price of a good is expected to rise in the future? If a seller expects the price of a good to rise in the future, the seller will store the goods now in order to sell more in the future. If the prices of good is expected to drop in the near future, sellers will earn more by placing goods on the market immediately, before the price falls.
40 Number of Suppliers If more suppliers enter a market, the market supply will rise and the supply curve will shift to the right. If suppliers stop producing a good and leave the market, market supply will decline, causing the supply curve to shift to the left.
41 Where do Firms Produce? Checkpoint: When is a firm likely to locate close to its consumers? A key factor in where a firm will locate is transportation. When inputs such as raw materials are expensive to transport, a firm will locate close to the inputs. When outputs (the final product) are more costly to transport, firms will locate close to the consumer.
Chapter 5: Supply Section 3
Chapter 5: Supply Section 3 Objectives 1. Explain how factors such as input costs create changes in supply. 2. Identify three ways that the government can influence the supply of goods. 3. Analyze other
More informationUnderstanding Supply. Chapter 5 Section Main Menu
Understanding Supply What is the law of supply? What are supply schedules and supply curves? What is elasticity of supply? What factors affect elasticity of supply? The Law of Supply According to the law
More informationSection 1 Understanding Supply
Chapter 5 - Supply Section 1 Understanding Supply Supply the amount of goods available Law of Supply Tendency for suppliers to offer more of a good at a higher price. Law of Supply Price As price increases
More informationObjective: What is the law of supply? What are supply schedules and supply curves? What is elasticity of supply?
Understanding Supply Objective: What is the law of supply? What are supply schedules and supply curves? What is elasticity of supply? *Be sure to leave a couple blank lines under each question and answer
More informationChapter 5: Understanding Supply
SCHS SOCIAL STUDIES What you need to know UNIT TWO 1. Explain the law of supply 2. Explain how firms decide how much labor to hire to produce a certain level of output 3. Identify three was government
More informationSupply. Understanding Economics, Chapter 5
Supply Understanding Economics, Chapter 5 What is Supply? Chapter 5, Lesson 1 What is Supply?! Supply the amount of a product a producer or seller would be willing to offer for sale at all possible prices
More informationProducing Goods & Services
Producing Goods & Services Supply is the quantities of a product or service that a firm is willing and able to make available for sale at all possible prices. The Law of Supply states that the quantity
More informationProducing Goods & Services
Producing Goods & Services Supply is the quantities of a product or service that a firm is willing and able to make available for sale at all possible prices. The Law of Supply states that the quantity
More informationChapter 5:1 Understanding Supply
Chapter 5:1 Understanding Supply Necessity versus Luxury Objectives: We will explain the law of supply. We will interpret a supply schedule and a supply graph. We will examine the relationship between
More informationCHAPTER 5:2: Costs of Production:
CHAPTER 5:2: Costs of Production: Objectives We will analyze how firms decide how much labor to hire in order to produce a certain level of output. We will analyze the production costs of a firm and explain
More informationLesson 1: What is Supply? Lesson 2: The Theory of Production Lesson 3: Cost, Revenue, and Profit Maximization
Lesson 1: What is Supply? Lesson 2: The Theory of Production Lesson 3: Cost, Revenue, and Profit Maximization 1 5 Supply BIG IDEAS = Responsibility, Choices, Changes, and Relationships Essential Questions:
More informationBell Ringer. 1. A gallon of gas 2. Big Mac 3. Apple iphone XS 4. Car. How much would you be willing to pay for the following items?
Bell Ringer How much would you be willing to pay for the following items? 1. A gallon of gas 2. Big Mac 3. Apple iphone XS 4. Car Bell Ringer How much would you be willing to pay for the following items?
More informationEconomics Marshall High School Mr. Cline Unit Two DA
Economics Marshall High School Mr. Cline Unit Two DA If you were running a business, what would you do if you discovered that customers were suddenly willing to pay twice as much for your product? If you
More informationI can explain the law of supply and analyze changes in supply in response to price and determinants.
I can explain the law of supply and analyze changes in supply in response to price and determinants. Success Criteria: Identify determinants of supply and accurately graph changes in supply. Basics of
More information1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price
1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price 2. Quantity demanded vs demand: quantity demanded is
More informationEconomics Unit 4. Supply
Economics Unit 4 Supply These documents are being distributed for educational discussion purposes only. They do not reflect any attempt by the North East Independent School District, its trustees, administrators,
More informationORGANIZING YOUR THOUGHTSII Use the diagram to help you take notes. Supply and prices are related. Indicate how they are related in the diagram.
Chapter 21, Section 1 For use with textbook pages 462 465 What Is Supply? KEY TERMS supply the various quantities of a good or service that producers are willing to sell at all possible market prices (page
More informationMultiple Choice Identify the letter of the choice that best completes the statement or answers the question.
Final day 2 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. What determines how a change in prices will affect total revenue for a company?
More informationChapter 6: Combining Supply and Demand
SCHS SOCIAL STUDIES What you need to know UNIT TWO 1. Explain how supply and demand create balance in the marketplace 2. Explain how a market reacts to a fall in supply by moving to a new equilibrium 3.
More information2000 AP Microeconomics Exam Answers
2000 AP Microeconomics Exam Answers 1. B Scarcity is the main economic problem!!! 2. D If the wages of farm workers and movie theater employee increase, the supply of popcorn and movies will decrease (shift
More information1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price
1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price 2. The two things needed for demand to exist are: willingness
More informationUnit 2 Supply and Demand
Unit 2 Supply and Demand -Study Guide- Answer, Explain and define the following: 1) Demand 2) Consumer 3) Supply 4) Producer 5) Subsidy 6) Give examples of goods that would have inelastic demand 7) Give
More informationPrice = The Interaction of Supply and Demand WEDNESDAY, FEBRUARY 17 THURSDAY, FEBRUARY 18
Price = The Interaction of Supply and Demand WEDNESDAY, FEBRUARY 17 THURSDAY, FEBRUARY 18 Chapter 4: Section 1 Understanding Demand What Is Demand? Markets are where people come together to buy and sell
More informationWHAT IS DEMAND? CHAPTER 4.1
Economics Unit 2 TEACHER WHAT IS DEMAND? CHAPTER 4.1 What is demand? THE DESIRE, ABILITY, AND WILLINGNESS TO BUY A PRODUCT. What is microeconomics? THE AREA OF ECONOMICS THAT DEALS WITH BEHAVIOR AND DECISION
More informationHomework 2 Answer Key
Econ 226 Principles of Microeconomics Fall, 24 Dr. Kathryn Wilson Due Date: Tuesday, September 28 th Homework 2 Answer Key 1. When the of movie admissions increases from $7 to $8, the demanded falls from
More informationReading Essentials and Study Guide
Lesson 3 Cost, Revenue, and Profit Maximization ESSENTIAL QUESTION How do companies determine the most profitable way to operate? Reading HELPDESK Academic Vocabulary generates produces or brings into
More informationECONOMICS 10/
ECONOMICS 10/15-10-19 AGENDA 10/15 BW-Math Minutes PPT/ Notes chapters 4-6 Exit Ticket Thursday Quiz over chapters 4-6 can use any HANDWRITTEN NOTES IN YOUR NOTE BOOK Essential Questions SCHEDULE 10/16
More informationGovernment Regulation
Government Regulation What do you think is the market price for renting an apartment in Plainfield? What happens to the quantity of demand and supply after the price change? List four outcomes that would
More informationChapter 6: Prices Section 1
Chapter 6: Prices Section 1 Key Terms equilibrium: the point at which the demand for a product or service is equal to the supply of that product or service disequilibrium: any price or quantity not at
More informationUnit 2 Supply and Demand
Unit 2 Supply and Demand Microeconomics - analyzes the Small Unit economic behavior of Individuals, Households and Firms to understand their decision-making process. -America s Free Enterprise- An economy
More informationDomain 3 MICROECONOMICS
Domain 3 MICROECONOMICS Georgia Standards of Excellence MICRO CONCEPT CLUSTER SSEMI1 Describe how households and businesses are interdependent and interact through flows of goods, services, resources,
More informationChapter 5: Price Controls: Multiple Choice Questions Chapter 6: Elasticity Multiple Choice Questions
Chapter 5: Price Controls: Multiple Choice Questions 1. ANSWER: d. ceiling. 2. ANSWER: a. a shortage, which cannot be eliminated through market adjustment. 3. ANSWER: b. the equilibrium price is below
More informationDEMAND. Economics Unit 2 Just the Facts Handout
DEMAND Economics Unit 2 Just the Facts Handout What is Demand? A market is a place where people buy and sell things. A market has two sides. There is a buying side and a selling side. The buying side of
More informationGRAPHS WHAAAA???!!!???
Mumford and Sons Supply and Demand GRAPHS WHAAAA???!!!??? Demand Combination of desire, ability, and willingness to buy a product Question: Demand Schedule Price Quantity How many movie DVDs Demanded would
More informationPerfectly Competitive Supply. Chapter 6. Learning Objectives
Perfectly Competitive Supply Chapter 6 McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives 1.Explain how opportunity cost is related to the supply
More informationIf the industry s short-run supply curve equals the horizontal sum of individual firms short-run supply curves, which of the following may we infer?
Microeconomics, Module 8: Competition: Long Run (Chapter 7) Illustrative Test Questions (The attached PDF file has better formatting.) Question 8.1: Long Run Equilibrium When is a competitive profit-maximizing
More informationChapter 6: Prices Section 1
Chapter 6: Prices Section 1 Objectives 1. Explain how supply and demand create equilibrium in the marketplace. 2. Describe what happens to prices when equilibrium is disturbed. 3. Identify two ways that
More informationSOLUTIONS TO TEXT PROBLEMS 6
SOLUTIONS TO TEXT PROBLEMS 6 Quick Quizzes 1. A price ceiling is a legal maximum on the price at which a good can be sold. Examples of price ceilings include rent control, price controls on gasoline in
More informationChoose the one alternative that BEST completes the statement or answers the question.
CHAPTER 3 The Demand for Labor In addition to the multiple choice and quantitative problems listed here, you should answer review questions 1, 3, 5, and 7 and problems 1-4 at the end of chapter 3. Multiple-Choice
More information23 Perfect Competition
23 Perfect Competition Learning Objectives After you have studied this chapter, you should be able to 1. define price taker, total revenues, marginal revenue, short-run shutdown price, short-run breakeven
More informationProblem Set 3 Eco 112, Spring 2011 Chapters covered: Ch. 6 and Ch. 7 Due date: March 3, 2011
Problem Set 3 Eco 112, Spring 2011 Chapters covered: Ch. 6 and Ch. 7 Due date: March 3, 2011 There are 30 multiple choice questions in this problem set. Answer these questions by the beginning of the class
More informationDemand & Supply of Resources
Resource Markets 1 Demand & Supply of Resources Resource demand Firms demand resources As long as marginal revenue exceeds marginal cost To maximize profit Resource supply People supply resources To the
More informationShort-Run Costs and Output Decisions
Semester-I Course: 01 (Introductory Microeconomics) Unit IV - The Firm and Perfect Market Structure Lesson: Short-Run Costs and Output Decisions Lesson Developer: Jasmin Jawaharlal Nehru University Institute
More informationCONTENTS. Introduction to the Series. 1 Introduction to Economics 5 2 Competitive Markets, Demand and Supply Elasticities 37
CONTENTS Introduction to the Series iv 1 Introduction to Economics 5 2 Competitive Markets, Demand and Supply 17 3 Elasticities 37 4 Government Intervention in Markets 44 5 Market Failure 53 6 Costs of
More informationECON (ENT) COURSE LESSON THREE. Supply and Demand. CHAPTER 7 Supply and Demand. Lesson Three Supply and Demand 93
ECON (ENT) COURSE LESSON THREE Supply and Demand CHAPTER 7 Supply and Demand Lesson Three Supply and Demand 93 EXERCISES Matching (28 points) From the list below, select the term that matches each of the
More informationEco402 - Microeconomics Glossary By
Eco402 - Microeconomics Glossary By Break-even point : the point at which price equals the minimum of average total cost. Externalities : the spillover effects of production or consumption for which no
More informationChapter 4 DEMAND. Essential Question: How do we decide what to buy?
Chapter 4: Demand Section 1 Chapter 4 DEMAND Essential Question: How do we decide what to buy? Key Terms demand: the desire to own something and the ability to pay for it law of demand: consumers will
More informationCH 4: Supply and Demand
CH 4: Supply and Demand Demand The law of demand states that the quantity of a good demanded is inversely related to the good s price In other words: Quantity demanded rises as price falls Quantity demanded
More information7-1 L ECTURE LAUNCHER PAGES PAGES
7-1 L ECTURE LAUNCHER Proctor & Gamble s introduced disposable diapers to the marketplace in 1961. At first parents only used Pampers for special occasions. Today, 95% of American parents use disposable
More informationINTI COLLEGE MALAYSIA UNIVERSITY FOUNDATION PROGRAMME ECO 185 : BASIC ECONOMICS 1 RESIT EXAMINATION : APRIL 2003 SESSION
ECO 185 (R) / Page 1 of 10 INTI COLLEGE MALAYSIA UNIVERSITY FOUNDATION PROGRAMME ECO 185 : BASIC ECONOMICS 1 RESIT EXAMINATION : APRIL 2003 SESSION Answer ALL questions in SECTION A in the OMR sheet provided
More informationMICROECONOMICS SECTION I. Time - 70 minutes 60 Questions
MICROECONOMICS SECTION I Time - 70 minutes 60 Questions Directions: Each of the questions or incomplete statements below is followed by five suggested answers or completions. Select the one that is best
More informationName: Student ID: Use the following to answer question 3: Figure: Market for Hamburgers. Version 3 Page 1
Name: Student ID: 1. Assume that a person is consuming the utility-maximizing quantities of pork and chicken. We can conclude that: A) the person is consuming the same amount of pork and chicken. B) the
More informationFigure: Profit Maximizing
Name: Student ID: 1. A manufacturing company that benefits from lower costs per unit as it grows is an example of a firm experiencing: A) scale reduction. B) increasing returns to scale. C) increasing
More informationDemand and Supply. Economics
Demand and Supply Economics How Do Demand and Price Interact? Demand = What we are willing and able to buy at various prices. Demand is expressed in terms of a time frame: eg. per day or per week. Quantity
More informationECONOMICS. Chapter 4 The Market Strikes Back
Lesson 1 ECONOMICS Chapter 4 The Market Strikes Back Review: Supply and Demand The previous lesson focused on demand and supply, we studied the demand curve and the supply curve P P S D Quantity Quantity
More information1. Explain 2. Describe 3. Create 4. Interpret
Law of Demand Section:- B Objectives 1. Explain the law of demand. 2. Describe how the substitution effect and the income effect influence decisions. 3. Create a demand schedule for an individual and a
More informationIntroduction. Learning Objectives. Chapter 24. Perfect Competition
Chapter 24 Perfect Competition Introduction Estimates indicate that since 2003, the total amount of stored digital data on planet Earth has increased from 5 exabytes to more than 200 exabytes. Accompanying
More informationLesson 4. Adam Smith and the Free Market 1/27/2013. Markets and Competition. Supply. Unit 2. Krugman, Module 6 pp
Unit 2 Adam Smith and the Free Market Lesson 4 Krugman, Module pp. 59-9 0 Markets and Competition A market is a group of buyers and sellers of a particular product. A competitive market is one with many
More informationAP Microeconomics Review With Answers
AP Microeconomics Review With Answers 1. Firm in Perfect Competition (Long-Run Equilibrium) 2. Monopoly Industry with comparison of price & output of a Perfectly Competitive Industry (which means show
More informationPreview from Notesale.co.uk Page 6 of 89
Guns Butter 200 0 175 75 130 125 70 150 0 160 What it shows: the maximum combinations of two goods an economy can produce with its existing resources and technology; an economy can produce at points on
More informationThe Structure of Costs in the
The Structure of s in the Short Run The Structure of s in the Short Run By: OpenStaxCollege The cost of producing a firm s output depends on how much labor and physical capital the firm uses. A list of
More informationWhat is a market? demand goods and services to satisfy their needs and wants. supply goods and services to earn profits
What is a market? The market for a good or service consists of all those producers willing and able to supply it and all those consumers willing and able to demand it. A market exists where there are buyers
More informationFINALTERM EXAMINATION FALL 2006
FINALTERM EXAMINATION FALL 2006 QUESTION NO: 1 (MARKS: 1) - PLEASE CHOOSE ONE Compared to the equilibrium price and quantity sold in a competitive market, a monopolist Will charge a price and sell a quantity.
More information6. The law of diminishing marginal returns begins to take effect at labor input level: a. 0 b. X c. Y d. Z
Chapter 5 MULTIPLE-CHOICE QUESTIONS 1. The short run is defined as a period in which: a. the firm cannot change its output level b. all inputs are variable but technology is fixed c. input prices are fixed
More informationClassnotes for chapter 13
Classnotes for chapter 13 Chapter 13: Very important Focuses on firms production and costs Examines firm behavior in more detail (previously we simply looked at the supply curve to understand firm behavior)
More informationTest 2. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Name R# ECO 2301.007 - Roach Test 2 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Air pollution generated by a steel mill is an example of 1)
More informationManagerial Accounting Chapter 5
Managerial Accounting Chapter 5 It s really Economics Except we analyze entries to do the calculations Cost Behavior Analysis The study of how specific costs respond to changes in the level of business
More informationECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION
YOUR NAME Row Number ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION Prof. Bill Even November 14, 2011 FORM 2 Directions 1. Fill in your scantron with your unique-id and the form number
More informationECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION
YOUR NAME Row Number ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION Prof. Bill Even November 14, 2011 FORM 4 Directions 1. Fill in your scantron with your unique-id and the form number
More informationSupply and Demand. Worksheet A-2A 2014
Supply and Demand Worksheet A-2A 2014 Worksheet A-2A 1. Surplus When the amount supplied exceeds the demand 2. Shortage When the amount demanded exceeds the supply 3. Utility The power to satisfy your
More informationReading Essentials and Study Guide
Lesson 1 What Is Supply? ESSENTIAL QUESTION What are the basic differences between supply and demand? Reading HELPDESK Academic Vocabulary various different Content Vocabulary supply amount of a product
More informationFour Market Models. 1. Perfect Competition 2. Pure Monopoly 3. Monopolistic Competition 4. Oligopoly
Four Market Models 1. Perfect Competition 2. Pure Monopoly 3. Monopolistic Competition 4. Oligopoly Perfect Competition Chapter 14 Perfect Competition Characteristics 1. Very Large Numbers Many buyers/sellers
More informationMICROECONOMICS CHAPTER 10A/23 PERFECT COMPETITION. Professor Charles Fusi
MICROECONOMICS CHAPTER 10A/23 PERFECT COMPETITION Professor Charles Fusi Learning Objectives Identify the characteristics of a perfectly competitive market structure Discuss the process by which a perfectly
More information1 of 14 5/1/2014 4:56 PM
1 of 14 5/1/2014 4:56 PM Any point on the budget constraint Gives the consumer the highest level of utility. Represent a combination of two goods that are affordable. Represents combinations of two goods
More informationTextbook Media Press. CH 10 Taylor: Principles of Economics 3e 1
CH 10 Taylor: Principles of Economics 3e 1 Quantity Produced by a Perfectly Competitive Firm A perfectly competitive firm is a price taker, which means that it must accept the prices at which its sell
More informationLecture # Long Run Equilibrium/Perfect Competition and Economic Welfare
Lecture # 15 -- Long Run Equilibrium/Perfect Competition and Economic Welfare I. Economic Rent Question: in real life, we certainly see firms earning positive profits, even in the long run. How do we explain
More informationR1. Which of the following are true for all firms? Which are true for competitive firms only? Which are false for all firms?
208 CHAPTER 7 Review Questions R1. Which of the following are true for all firms? Which are true for competitive firms only? Which are false for all firms? a. The firm faces a flat demand for its product.
More informationUNIT II SUPPLY AND DEMAND CHAPTERS 4-6
UNIT II SUPPLY AND DEMAND CHAPTERS 4-6 PAGE 11 CRASH COURSE #4: SUPPLY AND DEMAND Directions: As you watch the video, take any notes you deem relevant. You will receive some discussion questions to answer
More informationMicro Semester Review Name:
Micro Semester Review Name: The following review is set up to emphasize certain concepts, graphs and terms. It is the responsibility of the individual teachers to emphasize and review the analysis aspects
More informationCONTENT TOPIC 3: SUPPLY, PRODUCTION AND COST. The Supply Process. The Role of the Firm 10/10/2016
CONTENT TOPIC 3: SUPPLY, PRODUCTION AND COST - The factors of production - Combining factors of production: The law of returns - Costs of production: Short & Long Run - Deciding whether to produce in the
More information****** 1. How is the demand for an input dependent upon the demand for an output? 2. Given a wage, how does a firm decide how many people to hire?
1 Chapter 4- Income distribution and factor pricing Syllabus-Input markets: demand for inputs; labour markets, land markets, profit maximisation condition in input markets, input demand curves, distribution
More informationLecture 11. Firms in competitive markets
Lecture 11 Firms in competitive markets By the end of this lecture, you should understand: what characteristics make a market competitive how competitive firms decide how much output to produce how competitive
More informationMICRO EXAM REVIEW SHEET
MICRO EXAM REVIEW SHEET 1. Firm in Perfect Competition (Long-Run Equilibrium) 2. Monopoly Industry with comparison of price & output of a Perfectly Competitive Industry 3. Natural Monopoly with Fair-Return
More informationName: Date: Period: Test: Supply and Demand
Name: Date: Period: Test: Supply and Demand 1. What is the amount of a good or service that a consumer is willing and able to buy at various possible prices during a given period? d. quantity supplied.
More informationELASTICITY OF DEMAND. Mr. Cline Economics Marshall High School Unit Two CA
ELASTICITY OF DEMAND Mr. Cline Economics Marshall High School Unit Two CA The Correct Response Is.. Economists describe the ways in which consumers respond to price changes as Elasticity of Demand. Are
More informationECON 251 Exam 2 Pink. Fall 2012
ECON 251 Exam 2 Pink Use the table below to answer the following four questions The table below shows Harry s total utility from consuming beer and wine. The price of beer is $2 per bottle. The price of
More informationAP Microeconomics Chapter 8 Outline
I. Learning Objectives In this chapter students should learn: A. Why economic costs include both explicit (revealed and expressed) costs and implicit (present but not obvious) costs. B. How the law of
More informationSupply and Demand. Objective 8.04
Supply and Demand Objective 8.04 Supply and Demand Pages 258-259 259 copy bold terms and give a definition or description of each. Page 261 Copy the questions Worksheet A-2A 1. Surplus When the amount
More informationMicroeconomics: MIE1102
TEXT CHAPTERS TOPICS 1, 2 ECONOMICS, ECONOMIC SYSTEMS, MARKET ECONOMY 3 DEMAND AND SUPPLY. MARKET EQUILIBRIUM 4 ELASTICITY OF DEMAND AND SUPPLY 5 DEMAND & CONSUMER BEHAVIOR 6 PRODUCTION FUNCTION 7 COSTS
More informationChapter 6: Sellers and Incentives
Chapter 6: Sellers and Incentives Modified by Chapter Outline 6. 6. 6. 6. 6. 6. 1. Sellers in a Perfectly Competitive Market 2. The Seller's Problem 3. From Seller's Problem to Supply Curve 4. Producer
More informationCase: An Increase in the Demand for the Product
1 Appendix to Chapter 22 Connecting Product Markets and Labor Markets It should be obvious that what happens in the product market affects what happens in the labor market. The connection is that the seller
More information12-1 (4) EQ: What is Derived Demand? EQ: What is Marginal Physical Product? Factor Demand
E: What is a Factor Market? 12-1 (4) o far, when discussing markets, we have focused on the supply of and demand for products that consumers purchase and consume. However, there are also markets for the
More informationJacob: W hat if Framer Jacob has 10% percent of the U.S. wheat production? Is he still a competitive producer?
Microeconomics, Module 7: Competition in the Short Run (Chapter 7) Additional Illustrative Test Questions (The attached PDF file has better formatting.) Updated: June 9, 2005 Question 7.1: Pricing in a
More informationHours needed to produce one unit of manufactured goods agricultural goods Pottawattamie 6 3 Muscatine 3 2
Econ 101, sections 2 and 6, S06 Schroeter Makeup Exam Choose the single best answer for each question. 1. A "zero sum game" is one in which a. every player breaks even in the long run. b. there is only
More informationUnit 5. Resource Market. (aka: The Factor/Input/Labor Market)
Unit 5 Resource Market (aka: The Factor/Input/Labor Market) 2 C Producers Demand In co me Households Supply s e Re c so r u ur o s ce e s R $ t os The Circular Flow Model Businesses s G er ood vic s &
More informationSAMPLE FINAL. Part I - Multiple Choice Questions:
Part I - Multiple Choice Questions: SAMPLE FINAL 1. Which of the following is not a characteristic of a perfectly competitive market? a. Firms are price takers. b. Firms have difficulty entering the market.
More informationSupply and Demand Michael Powell, All Rights Reserved
Supply and Demand We have learnt that demand is the amount of a good or service consumers are willing to buy. The opposite of demand is supply. Supply is how much of a good or service a producer (a business)
More information1. If the per unit cost of production falls, then... A.) the supply curve shifts right (or down)
1. If the per unit cost of production falls, then... A.) the supply curve shifts right (or down) B.) there is a downward movement along the existing supply curve which does not shift C.) the supply curve
More informationCLEP Microeconomics Practice Test
Practice Test Time 90 Minutes 80 Questions For each of the questions below, choose the best answer from the choices given. 1. In economics, the opportunity cost of an item or entity is (A) the out-of-pocket
More information