Supply
The law of supply states....
As price goes up, quantity supplied goes up
What is equilibrium?
When quantity demanded and quantity supplied are equal
What does PPC stand for?
Production Possibilities Curve
A price control that sets a MINIMUM price for a good is called?
Price floor
Type of market structure that has identical products, barriers to entry are low, has lots of competition; known as a "price taker"
Perfect competition
The only thing that changes quantity supplied is?
Price
What happens to the equilibrium price when demand does not change, but supply shifts to the left?
Equilibrium price increases.
If Point A is directly on the line of a PPC, what does that mean regarding production?
Efficiency
A price control that sets a maximum price for a good is called?
Price ceiling
Type of market structure with one business and is known as a "price maker"
Monopoly
What happens to supply when firms leave a market?
Supply decreases/supply curve shifts left
Suppliers are motivated to produce greater quantities when what happens?
Price increases
If a point is outside of a PPC (to the right side), what does this mean?
Price ceilings will be placed where in regard to equilibrium?
Below equilibrium to keep prices from rising.
Type of market structure characterized by similar products that rely on non-price competition---jeans are an example
Monopolistic Competition
This almost always has the effect of increasing supply due to faster production or lower production costs.
Technology
If the government provides a subsidy to grow corn, what might happen to the supply of wheat (unsubsidized)?
Supply will decrease (shift left)
If a point is inside the PPC (to the left), what does this mean?
Underutilization of resources or inefficiency
Price floors are placed above equilibrium and can lead to a ______ (a type of disequilibrium).
surplus
Type of market structure of cartels and collusion
Oligopoly
The government action that can INCREASE supply by reducing the costs of production---AND--the government action that can DECREASE supply by increasing the cost to produce.
INCREASE=Subsidy
DECREASE=Higher taxes
If resource costs (inputs) go down, what will happen to supply?
Increase in supply/shift right
If a PPC is a straight line (not bowed out), what does this mean about opportunity cost?
Opportunity cost is constant at each point
What exists when quantity demanded exceeds quantity supplied?
Shortage
Name the 4 market structures in order of most competition to least competition
Perfect competition, monopolistic competition, oligopoly, and monopoly