Economic review unit 2+3

Demand

It is the willingness/ ability of consumers to buy different amounts of goods at different prices. It is a line NOT a single point.

Law of demand

Consumers will buy more of a product when the price is lower, and buy less when the price is higher.

Price high- less buy

Price low= more buy

Supply

The amount of the good/service the producer(s) are WILLING and ABLE to sell at different prices.

law of supply

As the price for a good increases the producers will make more of it, if the price goes down, the producers make less.

Equilibrium (P and Q)

The point of balance at which the quantity demanded equals the quantity supplied.

Shortage

A situation which consumers WANT more of a good/ service than the producers are willing/able to put out at a certain price.

Surplus

When the quantity supplied of a good is GREATER than the quantity demanded. Surpluses only happen when prices are above equilibrium.

Shifting the Demand Curve

Demand curves down. A shift to the right is an increase which means consumers are willing to buy more. As it shift to the left (left is LESS) they will buy LESS

Shifting the Supply Curve

Supply goes upward. As it moves to the right (increases) it shows that producers and willing and able to produce more. As it moves to the left, (decreases) means they will supply less.

Fixed cost

A cost that is the same no matter how many units of a good are made. Pay this no matter how much you sell.

Variable cost

A cost that changes with the number of units of a good produced.

Total cost

Fixed cost + variable cost = total cost

Total revenue

Sometimes the “Gross” revenue. It is the total amount of money a firm receives from selling its goods.

Profit

How much more a firm collects in revenue than it expends in cost.

Monopoly

Market has just ONE single seller. The product or service is unique it has no close substitutes. Barriers to enter are VERY HIGH.

Monopolistic Competition

Many companies compete in an open market to sell products that are similar but NOT identical. Shoe companies, food markets, ALL ABOUT BRANDING.

Oligopoly 

Markets that are dominated by a few large firms. This is airlines, soft drinks, and cereals.

Perfect/pure competition

Must have many buyers and sellers, sell the same product (hard to tell the difference,) easy to enter and leave the market, buyers and sellers are well informed about the products.

Corporations

A legally entity, owned by individual stockholders that can conduct business in its own name. (As if it’s an individual.)

Skilled/Unskilled Labor

Unskilled has no special training or skills involved. This can be things like a dish washer or a cashier. Skilled labor needs special abilities or training that doesn't have direct supervision. This includes plumbers and store managers.

Equilibrium Wages

The wage rate or price of labor that is set when the supply or workers meets the demand for workers in the labor market.

Labor unions

An organization of workers that try to improve the working conditions. This is wages, the workplace, and the benefits the members can get.

Labor supply

The number of workers WILLING to work for wages. If there are higher wages, they are more willing to give their labor over.

Labor demand

Employers demanding workers. It is the total number of workers an employer is willing/able to hire at a given wage rate