Factors Affecting Supply and Production Quiz

Consumer preferences do not directly affect the supply of a product.

The law of supply indicates that as the price of a good or service rises, suppliers are willing to offer more of it for sale.

Expectations of future prices can influence current supply decisions.

Government regulations can affect production processes and costs.

Fixed inputs, such as factory buildings, do not vary with the level of production in the short run.

Labor is an input whose quantity can be varied in the production process.

The production function shows how inputs are transformed into outputs within a production process.

Elasticity of supply measures how much the quantity supplied of a good or service responds to changes in its price.

In the short run, the quantity of labor is the main variable factor that influences production.

Economies of scale occur when the cost per unit of output decreases as the scale of production increases.

A shift in the supply curve occurs when factors other than price, such as technology or input costs, change the quantity that producers are willing to supply at each price level.

The long-run average cost curve displays the minimum average total cost achievable for various levels of output when all inputs are variable.

Marginal product measures the change in output resulting from a one-unit change in the quantity of a variable input.

Diminishing returns occur when adding more of a variable input to a fixed input results in smaller increases in output per additional unit of the variable input.

Economies of scope occur when the joint production of two or more goods or services results in lower production costs than producing them separately.