chapter 5 - Doral Academy Preparatory
Transcript chapter 5 - Doral Academy Preparatory
The Law Of Supply
Basically the higher the price, the more of the product
Since the price goes up the consumer must want the
goods more so its produced quicker
Market entry means when something at the moment is hot and is
making a lot of revenue other markets or business joins that market
because they understand is doing really good and making its profit.
The Supply Schedule
The schedule shows an even
amount of price range it gets
higher and then the production
Prices per slice of
Slices supplied per
The supply graph
Supply schedule get recorded, which creates a supply cure it s
like a demand curve. But it measures the quantity of the good
with the horizontal axis.
A market supply curve is to curve the difference in two with
two curves. It also shows how different suppliers with the same
good with all different prices.
Supply and Elasticity
Elasticity measures how consumers will react
to a change in a price.
Elasticity of supply is based on the same
concept, it’s the measure of the way suppliers
respond to change in price.
Elasticity of supply tells how firms will
respond to changes in the price of a good.
Example the change in gas.
Elasticity of supply and time
Elasticity of supply in the short run
In a short run, supply is inelastic whether the price
increases or decreases.
When supply is elastic a small amount increases in
price as a big effect on supply.
An example can be when cotton farms cannot respond
so fast to the increase of price with soybeans
because of the time it takes to produce the cotton
Elasticity in the long run
A supply can become more elastic over time.
Just like a demand, supplies can become more elastic
if the supplier has a long time to respond to a price
Labor and output
The main question
that an owner of a
business has is how
many people to hire
for its business.
The more people
hired the more
production is made by
Marginal product of labor
The marginal product
of labor is the total
output that hiring one
more worker gives
Increasing marginal returns
returns is when you
hire someone to
something and it
there’s no time
Diminishing marginal returns.
This is when you start
hiring too many
people the production
starts to decrease.
A companies main
objective behind all
company decisions is
how to maximize
made minus the total
The profit made is
dependent on how much
of a product the company
makes and also how
much they sell the
particular product for
Companies strive to find
a level of output where
they will end up making
the most profit
Additional income for
selling one more unit
of a good.
Good way to find the
best level of output.
The best level of
output is when the
marginal revenue is
the same as marginal
When the price of
companies strive to
increase production of
This is to maximize
profits and an
example of law of
The cost of operating
a facility. It includes
variable costs but not
Fixed costs exist
whether the factory is
open or not.
There are times when
keeping a money
losing factory open is
the best choice.
*Some factors can affect the price levels.
*Any materials, machinery, or labor use to make a good will affect
supply if the cost is changed.
Effect of rising cost:
*A supplier sets output where price is equal to marginal cost.
*Marginal cost includes the cost of the production.
*If the marginal costs rise the less profitable it can be.
*If a firm can’t control the price, the production is cut until it’s equal.
* Technology can lower production costs in industries.
* Robots and computers can replace workers and therefore makes the
workers get lower salaries.
* Technology lowers costs and increase supply at all price levels.
Government Influence on supply:
* Government has the power to affect the supplies of many goods by:
-Raising the cost
- Lowering the cost
*Subsidy: is a government payment that supports a business or market.
*Government often pays a producer a set subsidy for the goods produced.
* Some countries an their government have their reasons for
subsidizing producers. For example;
-Europe: Food shortage during WWII
-France: Farms, to protect the lifestyle and character.
*Government subsidizes manufacturers to protect young, grown industries from
strong foreign competition.
*Excise tax- a tax on the production or sale of a good.
*Increases production costs and adds an extra cost.
*Excise taxes can sometimes discourage the government thinks are harmful.
*Regulation- government intervention in a market that affects the production
of a good.
*Some regulations can increase the cost of manufacturing cars and reduce
the supply. It can shift to the left.
* Economics book