1. What’s Happening with Supply.
Chapter 5 Test Review - Economics

2. and ability to sell a product
Willingness
and ability to sell a product
at a given price
Supply

3. Less quantity is offered for sale when prices are low
More quantity is offered for sale when prices are high
Less quantity is offered for sale when prices are low
Law of Supply

4. Caused by a price change
Movement along a stable supply curve
Caused by a price change
Change in Quantity Supplied

5. Amount offered for sale at all prices
Shown by a shift of
a supply curve
Change in Supply

6. NICEPP or factors that cause a Change in Supply
Natural/Manmade, input cost, competition, future expectations, profitability of alternate products and by products.
Shifts the entire supply curve
NICEPP or factors that cause a Change in Supply

7. Increase in Supply P S S1 p p1 D Q q q1
S  .: P ↓ & Q ↑

8. Decrease in Supply S1 P S p1 p D Q q1 q
S  .: P↑ & Q↓

9. When supply increases:
The supply curve shifts_____.
rightward
Equilibrium price ______
decreases
Equilibrium quantity ______
increases

10. Increase in Supply P S S1 p p1 D Q q q1
S  .: P ↓ & Q ↑

11. When supply decreases:
The supply curve shifts_____.
leftward
Equilibrium price ______
increases
Equilibrium quantity ______
decreases

12. Decrease in Supply S1 P S p1 p D Q q1 q
S  .: P↑ & Q↓

13. Change in Quantity Supplied.
Which one of these involves movement along a stable supply curve caused by a change in price only? Change in Supply or Change in Quantity Supplied?
Change in Quantity Supplied.

14. A production period long enough to change the amount of both variable and fixed input costs used in producing products.
Long Run

15. The responsiveness of quantity supplied to a price change.
Supply Elasticity

16. This is found by adding together all variable and fixed costs associated with production.
Total Cost

17. The broad category of fixed costs that includes interest paid on loans, rent, taxes, and executive salaries.
Overhead

18. The extra revenue (money) from the sale of one more unit of output.
Marginal Revenue

19. A government payment to a producer (supplier of products) to encourage or protect certain economic activity.
Subsidy

20. Electronic business or exchange conducted over the internet.
E-Commerce

21. A production period so short that only variable inputs (usually costs like labor) can be changed.
Short Run

22. What does marginal mean in economics?
Next Unit. For example: Marginal Cost, Marginal Revenue, or Marginal Product.

23. The extra output due to the addition of one more unit of input (like a worker or labor).
Marginal Output

24. The costs of production that do not change when output changes.
Fixed Costs

25. A graphic portrayal showing a change in the amount of a single variable input (or cost) affects total output.
Production Function

26. The extra-cost of producing one additional unit of output..
Marginal Cost

27. The production cost that varies as output changes.
Variable Costs

28. Profit Maximizing Quantity of Output
The level of production where marginal cost is equal to marginal revenue.
Profit Maximizing Quantity of Output

29. The total output or production by a firm (company).
Total Product

30. The average price that every unit of output sells for.
Average Revenue

31. The total amount earned by a company (a firm) from the sale of products. It is the average price of a good times the quantity sold.
Total Revenue

32. The stage of production where output increases at a decreasing rate as more units of inputs of variable inputs are added.
Diminishing Returns

33. The phases or stages of production that consist of increasing, decreasing, and negative returns.

34. The production level where total costs equals total revenue
The production level where total costs equals total revenue. It is the production level needed if the company is to recover its costs.
Break-Even Point