chap 3 Flashcards
What is quantity supplied?
The amount of a good that sellers are willing and able to sell.
What is a supply schedule?
A table that shows the relationship between the price of a good and the quantity supplied.
What is a supply curve?
A graph of the relationship between the price of a good and the quantity supplied.
What are producers in the context of supply?
Businesses or firms that create and/or sell a good or service to the market.
What is a price-taker?
Someone who decides to charge the prevailing market price and whose actions do not affect the market price.
What is the Law of Supply?
The tendency for the quantity supplied to be higher when the price is higher.
How does the Law of Supply affect the shape of the supply curve?
It makes supply curves upward-sloping because the higher the price
What is the difference between quantity supplied and supply?
Quantity supplied refers to the amount provided at a specific price
What is the relationship between a firm’s supply curve and its marginal cost curve?
The supply curve is the same as the marginal cost curve for a firm in a perfectly competitive market.
What causes a movement along the supply curve?
A change in the price of the good or service.
What is a shift in the supply curve?
A movement of the entire supply curve itself
What are five factors that can shift a supply curve?
Input prices, productivity and technology, prices of related outputs, expectations, and number and type of sellers.
How does an increase in input prices affect the supply curve?
It shifts the supply curve to the left (decreasing supply).
How does an improvement in technology affect the supply curve?
It shifts the supply curve to the right (increasing supply).
What are complements-in-production?
Goods that are made together. The supply of a good will increase if the price of a complement-in-production rises.
What are substitutes-in-production?
Alternative uses of resources. The supply of a good will decrease if the price of a substitute-in-production rises.
How do expectations of future prices affect current supply?
if you expect the price of your product to rise next year, you can increase your profits by storing it and selling it next year.
This will decrease your supply this year (shifting your supply curve to the left) and increase your supply next year (shifting next year’s supply curve to the right).
How does the entry of new sellers affect market supply?
It increases market supply because If consumer demand rises over time, the price will rise, and suppliers can choose to devote new resources to production
What is the market supply curve?
A graph plotting the total quantity of an item supplied by the entire market at each price.
How is the market supply curve derived from individual supply curves?
By summing the quantity supplied by each firm at each price level.
In the equation P = 4Q
what does Q represent when P = 80?
Q = 20
What is the slope of the supply curve in the equation P = 4Q?
The slope is 4
