Supply: Thinking Like a Seller Flashcards
The tendency for the quantity supplied to be higher when the price is higher.
Law of Supply
A graph plotting the quantity of an item that a business plans to sell at each price.
Individual Supply Curve
Markets in which 1) all firms in an industry sell an identical good; and 2) there are many buyers and sellers, each of whom is small relative to the size of the market.
Perfect Competition
Someone who decides to charge the prevailing price and whose actions do not affect the prevailing price.
Price-Taker
Those costs—like labor and raw materials—that vary with the quantity of output you produce.
Variable Cost
Those costs that don’t vary when you change the quantity of output you produce.
Fixed Cost
Sell one more item if the price is greater than (or is equal to) the marginal cost.
Rational Rule for Sellers in Competitive Markets
The increase in output that arises from an additional unit of an input, like labor.
Marginal Product
The marginal product of an input declines as you use more of that input.
Diminishing Marginal Product
A graph plotting the total quantity of an item supplied by the entire market, at each price.
Market Supply Curve
A price change causes movement from one point on a fixed supply curve to another point on the same curve.
Movement Along the Supply Curve
The change in quantity associated with movement along a fixed supply curve.
Change in the Quality Supplied
A movement of the supply curve itself.
Shift in Supply Curve
A shift of the supply curve to the right.
Increase in Supply
A shift of the supply curve to the left.
Decrease in Supply
