Ch. 3 Supply and Producer Choice Flashcards
Individual Supply Curve
A graph that plants the quantity of an item that a business plans to sell at each price
Law of supply
The tendency for the quantity supplied to be higher when the price is higher
Perfect Competition
Markets in which all firms sell and identical good and there are many buyers and sellers each of whom is small relative to the size of the market
Price Takers
Someone who decides to charge the prevailing price and whose actions do not affect the prevailing price
Variable Costs
Costs that vary with the quantity of output you produce
Fixed costs
Costs that don’t vary when you change the quantity of an output you produce
Marginal Product
The increase in output that arises from an addition unit of input
Diminishing Marginal Product
Output of a product declines as you use more of the input
Market Supply Curve
A graph plotting the total quantity of an item supplied by the entire market at each price
Shift in the Supply Curve
Movement of the curve itself
Substitues in Production
Alternative uses of your resources. Supply of a good will decrease if a price of s substitute rises
Complements in Production
Goods made together. Supply of a good will increase
Five Factors That Shift Supply Curve
Input prices, productivity and technology, other opportunities, expectations, type and number of buyers
