Chapter 3 Flashcards
Past expenses
Not marginal opportunity cost
Supply
Businesses’ willingness to produce a particular product because price covers all opportunity costs
Rising prices
Two incentives for increased quantity supplied
Higher profits and covering higher marginal opportunity costs of production
Marginal opportunity cost
Additional opportunity cost from the next choice
Why do increasing marginal costs arise
Because inputs are not equally productive in all activities
When is marginal opportunity costs constant
When inputs equally productive in all activities
Market supply
Sum of supplied of all businesses willing to produce a particular product
Law of supply
If the price of a product rises quantity supplied increases
Supply curve
Over and down
Marginal cost curve
Up and over
The factors affecting supply
Technology
Environment
Prices of input
Prices of related products or services produced
Expected future prices
Number of businesses
Decrease in quantity supplied
Down along unchanged supply curve
Increase in quantity supplied
Up along unchanged supply curve
Supply decreases
Environmental harms production
Price of input rises
Price of a related product rises
Expected future price rises
Number of businesses decreases
Supply increases
Technology improves
Environment change helps production
Price of an input falls
Price of a related product falls
Expected future price falls
Number of business increases
