28 terms

Economics Vocab

a schedule of quantities that would be offered for sale at all possible prices that could prevail in the market
Supply Schedule
the quantities offered at each and every possible market
Supply Curve
slopes upward and to the right to reflect the tendency of suppliers to offer greater quantities for sale at higher prices
Law of Supply
the quantity supplied, or offered for sale, varies directly wit hits price
Quantity Supplied
the amount that producers bring to market at any one price
Change in Quantity Supplied
the change in amount offered for sale in response to a change in price
Change in Supply
producers offer different amounts of products for sale at all possible prices in the market
government payments to individuals, business, or other groups to encourage or protect a certain type of economic activity
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 variable inputs-usually assumed to be labor
Long Run
a period of production long enough for all inputs, including capital, to vary
Law of Variable Proportions
that in the short run, output will change as one input is varied while the others are held constant
Production Function
concept that relates to changes in output to different amounts of a single input while other inputs are constant
Total Product
total output produced by the firm
Marginal Product
the extra output generated by adding one more unit of variable input
Stages of Production
increasing returns, diminishing returns and negative returns- that are based on the way marginal product changes as variable inputs are added
Diminishing Returns
as more units of a certain variable input are added to a constant amount of other resources, total output keeps rising, but only at a diminishing rates
Fixed Cost
the cost that a business incurs even if the plant is idle and output is zero
total fixed cost
gradual wear and tear on capital goods over time and through use
Variable Cost
a cost that does change when the business rate of operation or output changes
Total Cost
production is the sum of the fixed and variable cost
Marginal Cost
extra cost incurred when a business produces one additional unit of a product
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
type of decision making that compares the extra benefits to the extra cost of an action
Break-Even Point
the total output or total product the business needs to sell in order to cover its total cost
Profit-Maximizing Quantity of Output
reached when marginal cost and marginal revenue is equal