Flashcards in Supply and Demand Test Deck (32):
the willingness and ability of producers to offer goods and services
the willingnes to buy a good or service and the ability to pay for it
define total revenue
a company's income from selling its products
define demand curve
graph that displays data from demand schedule; demand-down
define supply curve
graph the displays data from supply schedule; supply-sky-up
define demand schedule
list of how much of an item an individual is willing to purchase at every price
define supply schedule
list of how much of a good or service a producer is willing to offer at each price
define law of supply
1. Price decrease, supply decreases
2. Price increases, supply increases
define law of demand
1. Price decreases, demand increases
2. Price increases, demand decrease
define Price Floor
legal minimum price for a good or service ex: minimum wage
define Price Ceiling
legal maximum price for a good or service ex:gas prices every day
products used in place of other products to satisfy needs or wants ex:Nutella instead of PB
products used together ex: PB and Jelly
define Marginal cost
extra cost of producing 1 more unit
define marginal product
change in total output brought about by adding one more worker
define fixed costs
costs that the owner occurs no matter how much they produce
define variable costs
costs dependent upon the level of production output
define total profit
a government factor that affects supply
results when the quantity supplied is greater than the quantity demanded
results when the quantity supplied is less than the quantity demanded
define Equilibrium price
price at which the individual quantity demanded and individual quantity supplied are equal
How is total revenue calculated?
all sales or money coming into the business
what factors affect demand?
willingness to pay, ability to pay, market size, consumer taste, consumer expectations, substitutes and complemts
what factors affect supply?
input costs, labor productivity, technology, govt action, number of producers
How do business owners decide on the right number of workers?
How does a business owner calculate total profit?
total sales or revenues minus total costs
What motivates producers to increase supply?
price always motivates producers and consumers in a market economy
What do lower prices encourage?
consumers to buy goods and services
What does a surplus indicate?
prices are too high
What does a shortage indicate?
price is too low