Supply At the beginning of class... Grab your book Take out your notebook Please define: marginal...
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Supply
Supply At the beginning of class... Grab your book Take out your notebook Please define: marginal product of labor increasing marginal returns diminishing
At the beginning of class... Grab your book Take out your
notebook Please define: marginal product of labor increasing
marginal returns diminishing marginal returns
Slide 4
What are the costs of production? I.Production costs A.Fixed
costs 1.A cost that does not change no matter how much of a good is
produced 2.Most fixed costs involve the production facility a.The
cost of the building b.Rent c.Machinery repairs d.Property taxes
e.Salaries of workers
Slide 5
What are the costs of production? B. Variable Costs 1. A cost
that rises or falls depending on the quantity produced 2. costs of
raw materials and some labor a. To produce more of one product, the
raw materials and labor will increase. b. To produce less, the
materials and labor will decrease 3. Electricity is included in
variable costs
Slide 6
What are the costs of production? C. Total Cost 1. The sum of
the fixed costs plus the variable costs
Slide 7
What are the costs of production? D. Marginal Cost 1. the cost
of producing one more unit of a good 2. Look at figure 5.5 on page
120 3. Marginal cost and marginal returns are based upon
specialization. E. Marginal Revenue 1. the additional income from
selling one more unit of a good; sometimes equal to price.
Slide 8
Homework 1 + 2, p 119 1 + 2, p. 120 1 + 2. p. 121
Slide 9
Good After! In your notebook, please define: Marginal revenue
Average cost Operating cost Read 120-122
Slide 10
Setting Output II. Setting Output A. Marginal Revenue and
marginal cost 1. Marginal revenue (price) a. the additional income
from selling one more unit b. marginal revenue should not be less
than marginal cost 2. Average cost a. total cost divided by the
quantity produced
Slide 11
B. Responding to price changes 1. When price levels increase,
the marginal revenue increases over the marginal cost and the
company will produce more This is the Law of Supply in action
Slide 12
C. The Shutdown Decision 1. When the total cost is more than
total revenue If prices drop below the cost to make an item,
factories will shut down or switch their production lines The Law
of Supply
Slide 13
Application: With your table partner, please complete number 10
on page 122 and turn it in. # 10, a, b, and c
Slide 14
Four effects on supply Price of inputs New technology Weather
Government regulation...
Slide 15
Government regulation Subsidies Government payment that
supports a business or market Government pays a set subsidy for
each unit of a good produced Lower costs of production Farmers are
often subsidized Manufacturers in developing nations
Slide 16
Government regulation Excise Taxes Government can reduce the
supply of goods by using an excise tax Adds cost for each unit sold
Alcohol, cigarettes, high-pollutant gasoline Supply curve shifts to
the ????
Slide 17
Government regulation Regulation Government intervention in a
market that affects price, quantity, or quality of a good Law to
require car manufacturers to install technology reduce pollution
from auto exhaust Law requiring gasoline companies to sell
lead-free fuel
Slide 18
Study Guide: Supply and Demand Concepts: Supply and Demand Two
reasons for the law of demand Four events that can shift demand.
Supply. Know the difference between elastic and inelastic demand.
Be able to provide examples. Know the 2 different costs of
production and examples of each. Graphs: Supply, demand Tables:
Production costs table Know three ways that the government affects
supply
Slide 19
Study Guide: Supply and Demand: Vocab Demand Law of demand
Substitution effect Income effect Ceteris paribus Demographics
Inelastic demand Elastic demand Total revenue Supply Law of supply
Increasing marginal returns Diminishing marginal returns Fixed cost
Variable cost Total cost Marginal cost Marginal revenue Average
cost Subsidy Excise tax Regulation
