Bell Ringer #4 – 10/13/101. What is “profit motive”?2. Going across the x-axis, does

a demand curve generally increase or decrease?

3. Does a supply curve generally increase or decrease?

http://www.schooltube.com/video/471a0da70754e777db29/Economics-1-The-Supply-and-Demand-Curve-MTK-Style

SubsidiesSubsidies – payments to private businesses by the government.

Ex: Gov’t gives a subsidy to wheat farmers to lower cereal prices.

Subsidies help lower production costs and keep prices down. However, they are funded by taxes, so they have a price to everyone.

Ch 4, Sec 3 Terms“Making Production Decisions”

Productivity – amount produced per unit of input. Determines how efficiently resources are being used.

Total Product – all goods/services. produced in a given period of time, also called total output.

Marginal Product – change in output from adding more input.

Law of Diminishing ReturnsLaw of DR – As more input (such as labor) is added to a fixed supply of resources, productivity will increase up to a point, after which the marginal product will diminish.