Chapter 5 Summary
Supply
Key Terms
Supply: The willingess and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific time period.
Law of Supply: A law stating that as the price of a good increases, the quantity supplied of the good increases, and as the price of a good decreases, the quantity supplied of the good decreases.
Direct Relationship: A relationship between two factos in which the factors move in the same direction. For example, as one factor rises, the other rises, too.
Quantity Supplied: The number of units of a good priduced and offered for sale at a specific price.
Supply Schedule: A numerical chart illustrating the law of supply.
Supply Curve: A graph that shows the amount of a good sellers are willing and able to sell at various prices.
Technology: The body of skills and knowledge concerning the use of resources in production.
Advancement in Technology: The ability to produce more output with a fixed amount of resources.
Per-Unit Cost: The average cost of a good. For example, if $400,000 is spent to produce 100 cars, the average, or per-unit, cost is $4,000.
Subsidy: A financial payment made by government for certain actions.
Quota: A legal limit on the number of units of a foreign-produced good (import) that can enter a country.
Elasticity of Supply: The rlationship between the percentage change in quantity supplied and the percentage change in price.
Elastic Supply: The kind of supply that exists when the percentage change in quantity supplied is greater than the percentage change in price.
Inelastic Supply: The kind of supply that exists when the percentage change in quantity supplied is less than the percentage change in price.
Comprehension/Critical Thinking and Writing
Supply: The willingess and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific time period.
Law of Supply: A law stating that as the price of a good increases, the quantity supplied of the good increases, and as the price of a good decreases, the quantity supplied of the good decreases.
Direct Relationship: A relationship between two factos in which the factors move in the same direction. For example, as one factor rises, the other rises, too.
Quantity Supplied: The number of units of a good priduced and offered for sale at a specific price.
Supply Schedule: A numerical chart illustrating the law of supply.
Supply Curve: A graph that shows the amount of a good sellers are willing and able to sell at various prices.
Technology: The body of skills and knowledge concerning the use of resources in production.
Advancement in Technology: The ability to produce more output with a fixed amount of resources.
Per-Unit Cost: The average cost of a good. For example, if $400,000 is spent to produce 100 cars, the average, or per-unit, cost is $4,000.
Subsidy: A financial payment made by government for certain actions.
Quota: A legal limit on the number of units of a foreign-produced good (import) that can enter a country.
Elasticity of Supply: The rlationship between the percentage change in quantity supplied and the percentage change in price.
Elastic Supply: The kind of supply that exists when the percentage change in quantity supplied is greater than the percentage change in price.
Inelastic Supply: The kind of supply that exists when the percentage change in quantity supplied is less than the percentage change in price.
Comprehension/Critical Thinking and Writing
Supply Schedule for Air-Tread shoes
Price (In Dollars) Quantity Supplied (units)
$ 20 20
$ 40 40
$ 60 60
$ 80 80
$ 100 100
Supply Curve for Air-Treads
Price (In Dollars) Quantity Supplied (units)
$ 20 20
$ 40 40
$ 60 60
$ 80 80
$ 100 100
Supply Curve for Air-Treads
Scenario: Company goes bankrupt and is unable to produce Air-Treads
Scenario: Resource prices increase.
Scenario: Technology advances.
Scenario: Taxes increase.
Scenario: Government provides subsidies to the manufacturer.
Scenario: The EU puts a quota on how many pairs of Air-Treads can be sold in EU countries.
Scenario: Price rises from $60 to $80.
