Econ Chapter 5 Vocab Test

Supply refers to:

• The desire to own something and the ability to pay for it

• The amount of a good or service that producers are willing and able to offer for sale at different prices

• The amount of a good consumers are willing to buy

The Law of Supply states:

• As price increases, supply decreases

• As price decreases, supply increases

• As price increases, quantity supplied increases

A Supply Schedule shows:

• The quantity supplied of a good at different prices

• The amount consumers are willing to buy

• The government’s tax schedule

How does a Market Supply Schedule differ from an individual supply schedule?

• Focuses only on one supplier

• Shows total supply for the market

• Ignores changes in production costs

• Focuses on consumer demand

A Supply Curve represents:

• Consumer demand at different prices

• The relationship between price and quantity supplied

• The cost of production

A Market Supply Curve:

• Shows how supply changes for an entire market at different prices

• Focuses on individual supply decisions

• Is unrelated to production costs

• Stays the same regardless of changes in input costs

Marginal Product refers to:

• The additional revenue earned from selling one more unit

• The total output produced by all units

• The cost of producing one more unit

How does specialization improve production efficiency?

• Reducing the number of workers needed

• Assigning specific tasks to workers who are best at them

• Eliminating competition

Increasing Returns occur when:

• Adding more workers leads to greater productivity

• The cost of production rises faster than output

• More inputs result in decreasing output

Diminishing Returns occur when:

• Each additional input contributes more to output

• Total costs decrease as output increases

• Additional inputs result in smaller increases in output