Professional Documents
Culture Documents
1.5.1
Vocabulary/Concepts
• Supply
• Law of Supply
• Supply Schedule
• Market Supply Schedule
• Supply Curve
• Market Supply Curve
Supply
• the desire and ability to produce and sell a product.
Law of Supply
Supply Schedule
• A supply schedule lists how much of a good or service an individual
producer is willing and able to offer for sale at each price.
Market Supply Schedule
• A market supply schedule lists how much of a good or service all
producers in a market are willing and able to offer for sale at each
price.
Supply Curve
• A supply curve shows the data from a supply schedule in graph form.
Market Supply Curve
• A market supply curve shows the data from a market supplyschedule
in graph form.
What are the Costs of
Production?
1.5.2
Vocabulary/Concepts
• marginal product • total cost
• Specialization • marginal cost
• increasing returns • marginal revenue
• diminishing returns • total revenue
• negative returns • profit-maximizing
• fixed cost output
• variable cost • Break-even point
• Profit
Marginal Product
• is the change in total output
brought about by adding one more
worker.
• Example: Going from one worker to
two workers, the second worker
creates a marginal product of 4.
(Because there is a total product
change from 3 to 7. The difference
is 4.)
Specialization
• Having a worker focus on a particular aspect of production.
• Example: If you wash and dry dishes, it’s not as quick as if you wash
and your friend dries the dishes.
Increasing returns
• each new worker adds more to
total output than the last, as
shown by the marginal
product.
• Example: From 0 to 6 each
worker’s marginal product is
larger than the previous one’s.
Diminishing Returns
• each new worker causes
total output to grow but
at a decreasing rate.
• Question: Where does
this occur on the chart?
Negative Returns
• a new worker adds less to
total output than the last,
as shown by the marginal
product.
• Example: With the addition
of the 11th worker, the total
product actually decreases.
(As indicated by looking at
the marginal product)
Fixed Cost
• are expenses that the owners of a business must incur whether they
produce nothing, a little, or a lot.
• What are some examples?
Variable Costs
• What are some examples?
Total Costs