Economics TEST Tomorrow

Copy these notes. I will be absent tomorrow but Mr. Ellis will take you to read you the test. Meet in McDugle's room then y'all will walk to another teachers room from there. Do good for me!! 

Economics Chapter 5 Study Guide

Depreciation- The lessening value of capital goods over time

Elastic- Costs that Change

Inelastic- Costs that never change, but stay the same.

Fixed Costs- Production expenses that do not change as the level of output changes (Costs that are the same every month, never change)

Marginal Costs- The costs of producing one more unit of output.

Marginal Product- The change in output that occurs as a result of adding one more unit of input

Overhead- The total production costs of a company.

Profit- The key motivation behind a supplier’s behavior in providing goods to the market place

Regulations- Government rules that affect the costs of production.

Subsidy- Payment of money or benefits by the government to private businesses Given to farmers to  help offset the costs of production

Supply schedule list- A list that shows the relationship between the price of a good or service and the quantity that producers will supply

Taxes- Payment to the government to help fund governments services

Total Costs-The sum of the fixed costs and the variable costs.

Total Product- All of the items a company makes in a given period of time

Variable Costs- Production expenses that change as output changes (Costs that change every month

SUPPLY CURVE

·       Supply Increases (up), Shifts to the right

·       Supply decreases (down), shifts to the left

·       Profit Decreased, supply curve shifts to the left.

·       Profit Increase, supply curve shift to the right

·       When supply exceeds demand you have a Surplus.

·       The three main government tools that can shift the supply curve are taxes, subsidies, and regulations.

·       An increase in taxes levied on a business, which will ultimately decrease profit, will cause the supply curve to shift to the Left.

ELASTIC/INELASTIC

·       When a change in the price of a good causes little or no change in the quantity supplied, the product is Inelastic.

·       A good has elastic supply if it can be made quickly, inexpensively, and using a few readily available resources

·       Space Shuttles produced by NASA would be an example of a product with elastic supply. (Need doesn’t change)

·       The three factors that affect elasticity are Speed, Costs and Resource

SUPPLY

·       Law of SUPPLY, as price goes up, supply goes Up

·       According to the Law of Supply, as price goes down,supply goes down.

·       If the costs of raw materials rise, (Profit Decrease) supply will decrease.

·       When supply is less than demand you have a shortage.

·       DETERMINANTS OF SUPPLY: Things other than price that will affect supply

·       If taxes go up, the product margin (profit) goes down, then supply goes Down.

·       For supply to take place, a company must be willing and able to supply the product

LAW OF DEMAND- According to the Law of DEMAND, as price goes up, demand goes down.

COSTS

·       Rent is considered part of fixed costs and total costs.

·       Raw materials are considered part of Total Costs and Variable Cost.

·       A business makes a profit when its costs of production are less than its revenue.