Economics chapter 5 vocabulary

supply

the amount of a product that would be offered for sale at all possible prices that could prevail in the market.

law of supply

the principle that suppliers will normally offer more for sale at high prices and less at lower prices

supply curve

a graph showing the various quantities supplied at each and every price that might prevail in the market

market supply curve

the supply curve that shows the quantities offered at various prices by all firms that offer the product for sale in a given market

quantity supplied

the amount that producers bring to market at any given price

change in quantity supplied

the change in amount offered for sale in response to a change in price

supply schedule

a listing of the various quantities of a particular produce supplied at all possible prices in the market.

change in supply

a situation where suppliers offer different amounts of products for sale at all possible prices in the market

subsidy

a government payment to an individual, business, or other group to encourage or protect a certain type of economic activity.

supply elasticity

a measure of the way in which quantity supplied responds to a change in price.

theory of production

the relationship between the factors of production and the output of goods and services.

short run

a period of production that allows producers to change only the amount of the variable input called labor.

long run

a period of production long enough for producers to adjust the quantities of all their resources, including capital.

law of variable proportions

states that, in the short run, output will change as one input is varied while the others are held constant.

production function

a concept that describes the relationship between changes in output to different amounts of a single input while other inputs are held constant.

raw materials

unprocessed natural products used in production

total product

total output produced by the firm

marginal product

the extra output or change in total product caused by the addition of one more unit of variable input.

stages of production

increasing returns, diminishing returns, and negative returns, based on the way marginal product changes as the variable of labor is changed.

diminishing returns

the stage where output increases at a diminishing rate as more units of a variable input are added.

fixed cost

the cost that a business incurs even if the plant is idle and output is zero.

overhead

total fixed cost

variable cost

cost that changes when the business rate of operation or output changes

total cost

the sum of the fixed and variable costs

marginal cost

the extra cost incurred when a business produces one additional unit of a product

e-commerce

electronic business or exchange conducted over the Internet

total revenue

the number of units sold multiplied by the average price per unit.

marginal revenue

the extra revenue associated with the production and sale of one addition unit of output.

marginal analysis

a type of cost-benefit decision making that compares the extra benefits to the extra costs of an action.

break-even point

the total output or total product the business needs to sell in order to cover its total costs.

profit-maximizing quantity of output

reached when marginal cost and marginal revenue are equal