Chapter 3 Flashcards
What is marginal cost?
The additional opportunity cost of increasing quantity supplied changing with circumstances
What is similar about demand and supply choices?
They are both made considering alternatives.
Demand - alternative products
Supply - alternative uses for your time
What is different about demand and supply choices?
Demand - the more you buy the lower the maximum you will pay becomes
Supply - the more you supply the more the minimum payment needed increases
What are sunk costs?
Past expenses that can’t be reversed or recovered
What is supply?
Businesses willingness to produce a product or service because their opportunity costs are covered by their price
What is marginal opportunity cost?
The term applying to any cost relevant to a smart decision
What is the law of supply?
If the price of a product increases the quantity supplied increases
What are the six ways to shift a supply curve?
- Technology
- Environment
- Price of inputs
- Price of related products
- Expected future prices
- Number of businesses
