Model that shows the amount of a product that would be offered for sale at all possible prices by a producer.

Supply Curve

This principle explains that producers will offer more for sale at higher prices.

Law of Supply

A listing of the various quantitiesof a particular product suppliedat all possible prices by allproducers.

Market Supply Schedule

This graph represents thequantity offered at variousprices by all firms for a given product.

Market supply curve

Lumber for construction,factory workers, andnails used for roofing

Inputs (variable costs)

Farmers use this governmentinfusion of cash to keep theirfarms productive.

subsidies

Nanotechnology that improves theeffectiveness of fertilizers normallyhas this effect.

Increase in the supply ofagricultural products.

ORSupply curve for agricultural productsshifts to the right.

A pharmaceutical manufacturer who produces a popular cancer drugreceives a tip that a new and better drug will hit the market next monthcausing the pharmaceutical manufacturer of the old drug to do this?

Increase production before new drug comes out.

(Producer Expectations)

The amount that producers bring to market at any given price.

Quantity Supplied

The government imposesa tax on imported sugar causing the supply curvefor bakery donuts to shiftin this direction.

To the left

The portion of variable cost that is added when one additional unit is produced.

What is marginal cost?

Utilities, property taxes, rent, insurance, CEO’s salary

Fixed Costs

What category do raw materials and labor represent in a

production cost schedule

Variable costs

What producers do when operating costs (variable costs) are greater

than revenue

Shut down production facility

The additional output created byhiring another employee

Marginal Product of Labor

Elmo who manufactures toy cars and produces 600 cars per day hires one more employee. Total production of

toy cars decline to 580. This situation is known as what?

Negative marginal returns

Profit maximization occurs atthis point.

Where marginal cost equals marginal revenue, total revenue minus total

cost is highest, price (marginal revenue) minus average cost per unit

equals greatest per unit profit

The point at which total revenue minus total costs is greatest

Point of profit maximization

When the price of beanbags increases a producer will increase

production to what level?

Where price(marginal revenue) is equal to marginal cost

EPA standards for CO2 emissions increase causing auto manufacturers to do this.

Reduce production of autos

When the price of tennis shoes increase by $15.00, producers increase

production. What other factor may account for the increase in the market

supply of tennis shoes.

New producers of tennis shoes

Helium is found in varying concentrations in the world’s natural-gas deposits. An increase indemand for helium has led to a shortage. What does this sayabout the supply of helium

It is inelastic

How does a producer figure the total cost of production?

Fixed Costs plus Variable Costs

A manufacturer of grocery bags made from recycled material has one sewing machine and one pair of scissors. With two employees he was producing 100 bags a day. When he hired a third employee, total production went up to 130 bags per day. What situation best describes this level of production?

Diminishing Marginal Returns

The price of oranges drops and stays low for several years causingfarmers to finally grow avocados. This illustrates that oranges are elastic/inelastic, in the ‘long-run’, and elastic/inelastic in the ‘short-run’?

Elastic, Inelastic