ECONOMICS Chapter 5 Funsheet 1 - KEY

EQ: How do prices & other factors affect the decision-making process of firms? Standard: SSEMI2 1. Supply is the desire and ability to produce and sell a product. 2. The law of supply states that when prices decrease, quantity supplied decreases. 3. Quantity supplied is the amount a supplier is willing & able to supply at a certain price. 4. Ceteris paribus means all other things held constant. 5. A supply schedule is a chart that lists how much of a product a producer is willing & able to offer for sale at each price. 6. Variables are factors that can change. 7. A supply curve is a graph of the supply schedule. 8. The elasticity of supply is a measure of how responsive producers are to price changes in the marketplace. Factor 1: Time Factor 2: Nature of production

ECONOMICS
Chapter 5 Graphs
Price

Quantity What does this graph represent? The Law of Supply Statement A: As price increases, quantity supplied increases Statement B: As price falls, quantity supplied falls Statement C: Existing firms increase productionStatement D: New firms enter the marketStatement E: Ceteris paribus nothing else changes Statement F: Profit motive

Price

Quantity

What does this graph represent? A change in quantity supplied Statement A: A change in the amount supplied caused by a change in price Statement B: It is signified by movement along the supply curve Statement C: Results ONLY from a rise or fall in the price of a good or service