Chapter 3 (SUPPLY)

Question 1

Law of Supply

Answer 1

• when prices of a product or service rises, quantity supplied increases… in order to maximize in profits

Question 2

6 Factors to Change Supply

Answer 2

Change in…
1. Technology
2. Environment
3. Price of Inputs
4. Price of Related Products
5. Expected Future Prices
6. Number of Businesses

Question 3

Equation to Change Marginal Cost

Answer 3

• change in total cost / change in quantity
  Which equals…
• TC1-TC0 / Q1-Q0

Question 4

Market Supply

Answer 4

Sum of quantities of all produce at each price

Question 5

Sunk Costs

Answer 5

• past, already paid expenses that cannot be recovered.
• these past expenses ARE NOT marginal opportunity costs and have no influence on smart choices
• the same no matter what choice you make

Question 6

An increase in supply is a WHAT shift

Answer 6

RIGHT SHIFT

Question 7

A decrease in supply is a WHAT shift

Answer 7

LEFT SHIFT

Question 8

How to read supply curve

Answer 8

Over and down

Question 9

How to read marginal cost curve

Answer 9

Up and over