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 schedule
a listing of the various quantities of a particular product supplied at all possible prices in the market
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
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
deals with 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
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 costs
variable cost
a 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 additional 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
is reached when marginal cost and marginal revenue are equal