Producers in Markets Flashcards

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Who are producers in a market?

Firms that make and sell goods or services.

What is the main aim of most producers?

To earn profit by selling goods or services.

What is supply in economics?

The amount a producer is willing and able to sell at a given price in a time period.

What does the law of supply say?

When price rises, quantity supplied rises. When price falls, quantity supplied falls, if other things stay the same.

How do you calculate total revenue?

Total revenue = price x quantity sold.

How do you calculate profit?

Profit = total revenue – total cost.

What is the difference between fixed and variable costs?

Fixed costs do not change with output (like rent). Variable costs rise when output rises (like raw materials).

What is productivity?

Output per worker or per hour. Higher productivity can lower the cost per unit.

Name two things that can increase market supply.

Lower production costs, better technology, more firms entering, or good weather for farming.

What is price elasticity of supply (PES)?

It shows how much quantity supplied changes when price changes. A big change is elastic; a small change is inelastic.

What makes supply more elastic?

Spare capacity, stocks ready to sell, easy access to inputs, and more time to adjust.

What are economies of scale?

When average cost falls as output grows, for example from bulk buying or using larger machines.

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