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Chapter 21 Test
Study Study Studyyyyy
Terms in this set (32)
when prices rise
quantity supplied rises
when price falls
quantity supplied decreases
The amount of goods and services that producers are able and willing to sell at various prices during a specific time period.
law of supply
suppliers will normally offer more for sale at higher prices and less at lower prices
table showing quantities supplied at different possible prices
upward-sloping line that shows in graph form the quantities supplied at each possible price
Why are producers willing to make more of a good at a higher price?
What direction does a supply curve slope?
the money a business receives for its products or services over and above its costs
What are 3 things a producer can do with its profits?
1. keep it for themselves 2. increase wage for workers 3. invest in the business
the total of the supply schedules of businesses that provide the same good or service
In which direction does the supply curve shift when supply decreases
to the left
In which direction does the supply curve shift when supply increases
to the right
how does changes in the cost of resources impact supply
when prices fall, sellers are willing and able to produce and offer to sell more of the good. When prices rise supply falls.
the degree to which resources are being used efficiently to produce goods and services
the methods or processes used to make goods and services
how do changes in government policies impact supply
when the government establishes new regulations, the cost of production can be affected, causing a change in supply. Slows down supply by more regulations.
a government payment to an individual, business, or group in exchange for certain actions
responsiveness of quantity supplied to a change in price
what is the difference between supply elastic vs supply inelastic
elastic=big change inelastic=small change
A situation in which quantity supplied is greater than quantity demanded
A situation in which quantity demanded is greater than quantity supplied
the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy
What is a price ceiling?
government set maximum price that can be charged for a good or service
What is a price floor?
the minimum wage, the lowest legal wage that can be paid to most workers
how prices help producers decide WHAT to produce?
they focus on providing the goods and services that consumers are willing to buy at prices that allow the supplier to earn profits.
how prices help businesses and consumers decide HOW to produce?
what supplies to use in order to still make a profit
how prices help businesses and consumers decide FOR WHOM to produce
some businesses aim their goods at a small number of consumers willing to pay a higher price and some aim their goods to a larger number of consumers who want to spend less.
prices are neutral
they favor neither the producer nor the consumer
prices are flexible
prices can go up and down, they are flexible
prices and freedom of choice
a market economy typically provides a variety of products at a wide range of prices, consumers have many choices.
prices are familiar
something that weve known about all our lives - they are familiar and easily understood
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