Chapter 2.3

Question 1

Supply

Answer 1

The various quantities of a good or service a firm is willing and able to produce and supply to the market for sale at different possible prices, during a particular time period, center is paribus

Question 2

Law of supply

Answer 2

There is a positive relationship between the quantity of a good supplier over a particular period and it’s price, ceteris paribus

Question 3

Market supply

Answer 3

The sum of all individual firms’ supplies for a good

Question 4

Two causes of a vertical supply curve

Answer 4

There is a fixed quantity of the good supplied because there is no time to produce more of it
There is a fixed quantity of the god because there is no possibility of ever producing more of it

Question 5

Non-price determinants of supply definition

Answer 5

The factors other than price that can influence supply

Question 6

Non-price determinants of market supply

Answer 6

Costs of factors of production
Technology
Prices of related goods: competitive supply
Prices of related goods: joint supply
Producer price expectations
Taxes
Subsidies
The number of firms
Shocks or sudden unpredictable events

Question 7

Competitive supply

Answer 7

Two or more products that compete for the use of the same resources so that producing more of one means producing less of the other

Question 8

Joint supply

Answer 8

Two or more products whose production is derived from a single product, so it is not possible to produce more of one without producing more of the other

Question 9

Subsidy

Answer 9

A payment made to the firm by the government

Question 10

Short run

Answer 10

A time period during which at least one input is fixed and cannot be changed by the firm

Question 11

Long run

Answer 11

A time period when all inputs can be changed

Question 12

Total product

Answer 12

The total quantity of output produced by a firm

Question 13

Marginal product

Answer 13

The extra or additional output produced by one additional unit of a variable input

Question 14

Law of diminishing marginal returns

Answer 14

As more and more units of a variable input are added to one or more fixed inputs, the marginal product of the variable input at first increases, but there comes a point when it begins to decrease. Presupposes that the fixed inputs remain fixed and that the technology of production is also fixed

Question 15

Total cost

Answer 15

All costs of production incurred by a firn

Question 16

Marginal cost

Answer 16

The extra or additional cost of producing one more unit of outout

Question 17

When marginal product increases, marginal cost ___; when marginal product is maximum, marginal cost is ___; when marginal product falls, marginal cost ___

Answer 17

decreases; minimum; increases

Question 18

Which part of a firm’s marginal cost curve is its supply curve?

Answer 18

The portion where the extra cost of producing one more unit of output is equal to the price of that unit