1. Chapter 5 Section 3

2.  Effects of Rising Costs ◦ Input costs increase, so does marginal cost ◦ Curve shifts to left  Technology ◦ Can lower production costs ◦ Curve shifts to the right

3.  Subsidies ◦ A government payment that supports a business or market ◦ Lower costs, allows firms to produce more ◦ Example: farm subsidies, banks and national airlines (Europe)

4.  Taxes ◦ Excise tax: tax on the production or sale of a good ◦ Reduces the supply ◦ Supply curve shifts to the left  Regulation ◦ Government intervention in a market that affects the price, quantity, or quality of a good ◦ Typically supply curve shifts to the left

5.  Changes in the Global Economy ◦ US imports oil from Russia. A new oil discovery in Russia could increase the supply of oil to US market and shift the supply curve to the right.  Future expectations of price  Number of suppliers

6.  If output is bulky or perishable, the firm will produce near consumers  Will locate near inputs if inputs are expensive to transport.