Studied by 297 PeopleDemand
Tags & Description
Demand
The various amounts of a product that someone is willing and able to buy over a range of possible prices at one point in time.
Microeconomics
the branch of economics that studies the economy of consumers or households or individual firms
Demand schedule
Shows the various quantities demanded of a particular product at all prices at a given time.
incentive
a positive motivational influence
Demand Curve
Shows the quantity demanded at each price that might prevail in the market
Law of Demand
The quantity demanded varies inversely with its price
Market Demand Curve
Shows the quantities demanded by everyone who is interested in purchasing the product
marginal utility
the amount that utility increases with an increase of one unit of an economic good or service
Diminishing marginal utility
The extra satisfaction we get from using additional quantities of the product begins to decline
Change in quantity demanded
A change that is graphically represented as a movement along the demand curve
Income effect
The change in quantity demanded because of a change price that alters consumers' income
Substitution effect
the change in quantity demanded because of a shift in relative prices
Change in demand
People may decide to buy different amounts of a product at the same price.
substitute
Can be used in place of other products. Demand decreases if price of its substitute decreases (direct relationship)
Complements
Related goods, increases the use of the other. Decrease in price of one causes increase of demand in other (inverse relationship).
Elasticity
The measure of responsiveness that describes the wat a dependent variavle changes in response to a change in an independent variable
Demand elasticity
The extent to which a change in price causes a change in quantity demanded
elastic
Change in price>change in quantity demanded, change in price moves in opposite direction from change in revenue, available substitutes, more income=more elastic, curve is more horizontal and gradual
Inelastic
Change in price<change in quantity demanded, change in price moves in the same direction as change in revenue, no available substitues, less income=less elastic, curve is vertical, rigid and steep.
Unit elastic
When a given change in price causes a proportional change in quantity demanded. =1
Supply
The amount of a product that would be produced, grown, or acquired and offered for sale at all possible prices that could prevail in market.
Law of Supply
More will be offered for sale at higher prices than at lower prices
Supply Curve
Graph that shows the quantities supplied at each possible price in the market
Market supply curve
Shows the quantities offered at various prices by all firms that sell the same product in a given market
Quantity supplied
specific amount offered for sale at a given price; point on the supply curve
Short run
Production period so short that only variable inputs (usually labor) can be changed
Long run
production period long enough to change amount of variable and fixed inputs used in production
Total production
total output or production by a firm
Marginal product
Extra output due to the addition of one more unit of input
Stages of production
Phases of production that consist of increasing, decreasing, and negative returns
Average revenue
Average price that every unit of output sells for
Total revenue
Total amount earned by a firm from the sale of its products; averahe price of a good sold times the quantity sold
Marginal revenue
Extra revenue from the sale of one additional unit of output
Profit-maximizing quantity of output
Level of production where marginal cost is equal to marginal revenue
Break-even point
Production level where total cost=total revenue; production needed if the firm is to recover its costs
E-commerce
commerce conducted electronically
Diminishing returns
Stage of production where output increases at a decreasing rate as more units of variable input are added
Fixed costs
Costs of production that do not change when output changes
Overhead
Broad category of fixed costs that includes interest, rent, taxes, and executive salaries.
Variable costs
Production cost that varies as output changes; labor, energy, raw materials
Total cost
Sum of variable cost plus fixed cost; all costs associated with production
marginal cost
the increase or decrease in costs as a result of one more or one less unit of output
Change in quantity supplied
Change in the amount offered for sale in response to a price change; movement along the supply curve
Change in supply
Different amounts offered for sale at each and every possible price in the market; shift of the supply curve
subsidy
a grant paid by a government to an enterprise that benefits the public
Supply elasticity
Responsiveness of quantity supplied to a change in price
Production function
Shows how a change in the amount of a single variable input affects total output
price
The monetary value of a product
Rationing
System of allocating goods and services without prices