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ECONOMICS GUIDED READING CHAPTER 5: “SUPPLY” Section 1 “Understanding Supply” pgs. 101-107 1. What does the “ LAW OF SUPPLY ” state? 2. What is Supply? 3. Describe Quantity Supplied. 4. 5. These two movements A. B. combine to create the A Supply Schedule shows 6. This compares two or factors that can change. A change in quantity supplied will 7. 8. 9. 10. 11. 12. 13. 14. ` __ __ __ __ __ __ __ __ __ __ __ __ _______ __ __ __ __ __ __ A market supply schedule shows the __ __ __ What is a Supply Curve & how is it different from a schedule? __ __ __ Explain Elasticity of Supply __ __ __ If supply is not very responsive to changes in price and elasticity is less than one, then it is considered ______. What is Unit Elasticity? ____ ____ What is the key factor that will determine if supply is elastic or inelastic? ____ Supply is considered in the short run because suppliers cannot produce substantially more in a short time even if prices go up. Supply can become more elastic in the ____ because they have more time to prepare to increase supply. 1 15. Which direction does the supply curve slope? ____ Draw examples of an elastic and an inelastic Supply Curve, make sure you label each one: (A) Elastic Supply Curve (B) Inelastic Supply Curve SECTION 2-“Costs of Production” pg 108-114 1. The change in output from hiring one additional unit of labor (worker) is called ____ 2. A level of production in which the marginal product of labor decreases as the number of workers increases is called ____ 3. Describe diminishing marginal returns ____ ____ ____ 4. is the cost of paying workers & purchasing capital and it is considered the cost of producing goods. 5. are costs that do not change with the level of Production no matter how much a producer produces. Examples: ____ ____ 6. change as the level of production changes. Examples could be : ____ 7. Which factors of production are associated with variable costs: A. ____ B. ____ 8. are fixed cost plus variable costs. 9. is the cost of producing one more unit of a good. 11. The best level of output is when is equal to . Any other level of output would generate less profit. 12. is the cost of operating a facility such as a store or factory. 2 13 (A) Draw/label a curve showing a showing a change in Quantity Supplied (A) ___ (B) Draw/label a curve change in Supply (B) ________ Section 3 “Changes in Supply” Pgs. 116-121 1. List the four factors that will bring about a Change in Supply: A. ____ B. ____ C. ____ D. ____ 2. As the level of cost for inputs rises the supply curve will shift to the ____ due to decreasing profits. On the other hand, if the price of outputs decrease, the supply curve will shift to the because profits will increase. 3. Input costs can drop as advancements in are made. Technology lowers costs and increases supply at all price levels. 4. List three ways that government can affect supply. A. ____ B. ____ C. ____ 5. One method used by government to affect supply is to give ____. A is a government payment that supports a business or market. 6. A reason that government might subsidize an industry is to protect ____ industries from foreign competition. 7. What type of tax might the government use to reduce the supply of certain goods? Give two examples of this type of tax: A. ____ B. ____ 8. An indirect means by government to affect supply would be through government . Give an example: ____ ____ 9. As you have read a large & rising share of goods & services is produced in one Country and imported to be sold to consumers. Give an example of a product that will cause a change in supply to the US markets. ____ ____ 3 ____ ____ 10. List another factor that can influence our supply. Example: future expectations of price. ____ ____ ____ 11. One final factor to consider when looking at changes in supply is the ____ of suppliers. If more producers enter the market the supply of goods will . If producers leave, the market supplies will _____________________________________. 12. Draw/label a curve showing an (A) Increase in supply (B) Decrease in Supply (A) (B) 4