Chapter 5 Study Guide

Question 1

A _____ is a graph that shows the various quantities supplied at each and every price that might prevail in the market

Answer 1

Supply Curve

Question 2

Productivity will _____ if workers are unmotivated

Answer 2

Decrease

Question 3

If producers expect _____ in the future, they may try to produce and sell as much as possible right away

Answer 3

Lower Prices

Question 4

When more suppliers enter the market, the market supply will _____

Answer 4

Shift to the Right

Question 5

_____ cost is the cost that a business incurs even if there are no employees and no production takes place

Answer 5

Fixed

Question 6

The number of items sold multiplied by the average price of each item yields the _____ of a business

Answer 6

Total revenue

Question 7

An increase in the cost of inputs can cause the supply curve to shift to the _____

Answer 7

Left

Question 8

The introduction of technology usually shifts the supply curve to the _____

Answer 8

Right

Question 9

_____ cost is the extra cost incurred when a business produces one more unit of a product

Answer 9

Marginal Cost

Question 10

The four important measures of cost are: _____

Answer 10

Total Cost, Fixed Cost, Variable Cost, and Marginal Cost

Question 11

The following can change the market supply curve: the cost of _____, the expectation that prices are about to _____, and the numbers of _____ offering the product

Answer 11

Labor; Increase; Sellers

Question 12

The supply of a product normally decreases if taxes on the product _____

Answer 12

Increases

Question 13

When employees are getting in each other’s way, the firm is operating in _____ of production

Answer 13

Stage III

Question 14

Total cost is the sum of the _____ and _____ costs

Answer 14

Fixed; Variable

Question 15

The level of profit-maximizing output is reached when _____ is equal to _____

Answer 15

Marginal Cost; Marginal Revenue

Question 16

When producers offer fewer products for sale at each and every price, the supply curve has shifted to the _____

Answer 16

Left

Question 17

The theory of production deals with the relationship between the _____ and the output of goods and services

Answer 17

Factors of Production

Question 18

Rent payments and property taxes would be counted as _____

Answer 18

Fixed Costs

Question 19

Many businesses are engaging in e-commerce because _____ costs are minimal

Answer 19

Fixed

Question 20

_____ will be maximized when marginal revenue equals marginal cost

Answer 20

Profits

Question 21

The _____ is a period of production in which producers can adjust the quantities of their resources, including capital

Answer 21

Long Run

Question 22

The Law of Variable Proportions states that in the _____, output will change as one input is varied while others are held constant

Answer 22

Short Run

Question 23

The three stages of production are: increasing returns, _____, and negative returns

Answer 23

Diminishing Returns

Question 24

A production function describes the relationship between changes in output to different amounts of a single input while other inputs are held _____

Answer 24

Constant

Question 25

The theory of production deals with the relationship between _____ and the output of goods and services

Answer 25

Factors of Production

Question 26

Amount of a product that would be offered for sale at all possible prices is _____

Answer 26

Supply

Question 27

Cost a business incurs even if nothing is produced is _____

Answer 27

Fixed Cost

Question 28

Graph showing the various quantities supplied at each and every price is _____

Answer 28

Supply Curve

Question 29

Cost that changes when the rate of operation or output changes is _____

Answer 29

Variable Cost

Question 30

Number of units sold multiplied by the average price per unit is _____

Answer 30

Total Revenue

Question 31

Amount of a product that producers bring to market at any given price is _____

Answer 31

Quantity Supplied

Question 32

Unprocessed natural products used in production are _____

Answer 32

Raw Materials

Question 33

Total product a firm must sell to cover its total costs is the _____

Answer 33

Break-Even Point

Question 34

Government payment to encourage or protect an economic activity is a _____

Answer 34

Subsidy

Question 35

Period of production that’s long enough for adjustments in all resources is the _____

Answer 35

Long Run

Question 36

On supply curve SS shown on the graph, how does the quantity supplied change when the price increases for $1 to $2? What does this tell you about the elasticity of the supply curve? Explain.

Answer 36

Doubling the price from $1 to $2 causes the quantity supplied to triple from 2 to 6. Because a change in price results in a more-than-proportional change in quantity supplied, the supply curve is elastic