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Model that shows the amount of a product that would be offered for sale at all possible prices by a producer.
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Supply Curve
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This principle explains that producers will offer more for sale at higher prices.
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Law of Supply
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A listing of the various quantitiesof a particular product suppliedat all possible prices by allproducers.
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Market Supply Schedule
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This graph represents thequantity offered at variousprices by all firms for a given product.
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Market supply curve
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Lumber for construction,factory workers, andnails used for roofing
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Inputs (variable costs)
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Farmers use this governmentinfusion of cash to keep theirfarms productive.
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subsidies
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Nanotechnology that improves theeffectiveness of fertilizers normallyhas this effect.
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Increase in the supply ofagricultural products.
ORSupply curve for agricultural productsshifts to the right.
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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?
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Increase production before new drug comes out.
(Producer Expectations)
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The amount that producers bring to market at any given price.
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Quantity Supplied
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The government imposesa tax on imported sugar causing the supply curvefor bakery donuts to shiftin this direction.
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To the left
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The portion of variable cost that is added when one additional unit is produced.
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What is marginal cost?
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Utilities, property taxes, rent, insurance, CEO’s salary
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Fixed Costs
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What category do raw materials and labor represent in a
production cost schedule
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Variable costs
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What producers do when operating costs (variable costs) are
greater than revenue
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Shut down production facility
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The additional output created byhiring another employee
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Marginal Product of Labor
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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?
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Negative marginal returns
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Profit maximization occurs atthis point.
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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
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The point at which total revenue minus total costs is greatest
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Point of profit maximization
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When the price of beanbags increases a producer will increase
production to what level?
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Where price(marginal revenue) is equal to marginal cost
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EPA standards for CO2 emissions increase causing auto manufacturers to do this.
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Reduce production of autos
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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.
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New producers of tennis shoes
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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
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It is inelastic
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How does a producer figure the total cost of production?
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Fixed Costs plus Variable Costs
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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?
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Diminishing Marginal Returns
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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’?
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Elastic, Inelastic