Economics Chapter 5 Review

Concepts Supply Curves What are they? They show quantity supplied at each price Movement along the curve – Causes Change in price Movement of the curve – Causes Change in the 7 things on the INDEX CARD Slope of the curve Positive slope because increase in price  increase in quantity supplied

Change in Supply – Movement of the Curve Pg. 120

Concepts Supply Schedules Supply Elasticity What are they? They show quantity supplied at each price What information do they show? How are they constructed? Supply Elasticity How do we determine elasticity? Horizontal line: elastic Vertical line: inelastic More than proportional: elastic Less than proportional: inelastic Proportional: unit elastic

Supply Elasticity Pg. 124

Concepts Market Supply Law of Supply e-commerce What does it show It shows how much of a product is supplied by ALL businesses Law of Supply Define e-commerce Why would businesses engage in? What are the benefits? No employees, no need to pay rent, free advertisement

Determining Market Supply Pg. 119

Concepts Theory of Production Production Schedule Reading the schedule Graphing the information Profit Maximizing Point MC = MR

Section 2 –Visual Summary Pg. 139

Concepts 3 Stages of Production Cost Identifying: Stage I, II, III Characteristics: Increasing, diminishing, negative Cost Total: the sum of your fixed cost and variable profit Fixed: the costs that don’t change Variable: costs that do change Marginal: cost to make each additional product

Production, Costs and Revenues Pg. 134

Section 1 –Visual Summary Pg. 139

Section 3 –Visual Summary Pg. 139

A farmer purchases a new type of seed corn A farmer purchases a new type of seed corn. What effect might this new technology have on her production? Why? It will shift to the right and that means that supply will increase because of an increase in production. New technology will make the curve shift to the right.

How do you think the inventions and changes in technology affect goods imported from other countries? Imports are goods that come from other countries. Improvements in technology and inventions and transportation will help increase supply of imported goods to the United States.

Essay Questions On supply curve, how does the quantity supplied change when the price increases? How is supply elasticity determined? Compare proportional changes to explain how you know. What does this tell you about the elasticity of the supply curve? Explain. When the price increases, quantity supplied also changes and this is movement on the curve. If the line is more horizontal, it is elastic. If it is more vertical, it is inelastic. If a business quickly changes production when a change in price occurs, it is elastic.

Essay Questions What causes supply of a good or service to increase as price rises? Explain your answer thoroughly. When there is an increase in price, there is an increase in quantity supplied so there are more goods offered as prices increase.

Review Questions Page 140 – 141 21,27,36,37