Supply Basics
The willingness and ability of producers to sell goods and services.
Supply.
Why are Supply curves always upward sloping?
Because as price increases, quantity supplied also increases. Producers want to supply more when prices are higher in the hopes of making more money.
INFERIOR goods are...
Goods that consumers demand less of when their incomes increase.
Why does gasoline have inelastic Supply?
Because it is a scarce, natural resource whose quantity supplied cannot be quickly changed by producers.
What happens to Supply when technology improves?
It increases.
As price increases, the Quantity Supplied also increases. As price decreases, the Quantity Supplied also decreases.
The Law of Supply.
What does it mean for a producer to "break even"?
NORMAL goods are...
Goods that consumers demand more of when their incomes increase.
What does elasticity measure in regards to producers?
How responsive producers are to changes in price.
A new machine makes production faster. This shifts the Supply curve...
To the right.
Producers are more willing to to sell goods when prices are _________.
Higher.
What is Specialization?
The Law of Diminishing Marginal Utility.
What is the main factor that affects elasticity of Supply?
The ability of producers to change production in response to changes in price.
When more sellers enter a competitive market, what happens to Supply?
It increases.
What are increasing returns?
More workers = more Marginal Product.
What is the Total Revenue formula?
TR = (p) x (q)
TR = (MR) x (TP)
What is the name of the fancy table that we use to plug price and quantity values into a graph?
Demand Schedule (or Supply Schedule).
Elasticity, Inelasticity, and Unit Elasticity are represented by what numbers?
E = > 1
I = < 1
U = 1
What is a government subsidy, and how does it affect Supply?
Subsidies are implemented by the government to increase production of certain goods or services. Subsidies increase Supply.
What are diminishing returns? Give an example.
More workers = less marginal product. Paying the wages of workers that aren't needed for optimal production leads to a loss.
What is the profit-maximizing output?
MR=MC.
The government raises the minimum wage, increasing production costs. Even though prices have not changed, fewer goods are offered for sale. Is this a change in supply or demand?
A decrease in Supply.
% change in qs / % change in price
What is an excise tax, and how does it affect Supply?