Chapter 5 Supply

Chapter 5 Section 1: What is Supply

Main Idea: For almost any good or service, the higher the price, the larger the quantity that will be offered for sale.

Vocabulary

SupplyLaw of SupplySupply scheduleSupply curveMarket supply curveQuantity suppliedChange in quantity suppliedChange in supplySubsidySupply elasticity

Notes

What is the difference between a supply schedule and a supply curve?

How are market supply curves obtained?What factors cause change in supply?

◦A◦B◦C◦D◦E◦F◦G

Assignment to turn in

Study the graphs in figures 5.1, 5.2, 5.3, 5.4

Answer the questions (in complete sentences) that appear in yellow at the bottom of each figure box.

Ch 5 section 2: The Theory of Production

Main Idea: A change in the variable input called labor results in a change in production

vocabulary

Theory of productionShort runLong runLaw of variable proportions production function raw materialstotal productmarginal product stages of production diminishing returns

Notes

What relationship is the theory of production based on?

How does marginal product change in each of the 3 stages of production

What will happen if companies continue to hire workers?

Activity to turn in

Figure 5.5

Ch 5 section 3: Cost, Revenue, and Profit

MaximizationMain Idea: Profit is maximized when the marginal costs of

production equal the marginal revenue from sales.

vocabulary

Fixed costOverheadVariable costTotal costMarginal costE-commerceTotal revenueMarginal revenueMarginal analysisBreak even pointProfit-maximizing quantity of output

Notes

What are the 4 measures of cost?What are the 2 measures of revenue?How is marginal analysis used to

determine break-even and profit maximizing decisions?