the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy
costs that remain the same regardless of the amount of product a firm produces
costs that change according to the level of production
an oversupply of goods
부족 an insufficient amount (not enough)
Law of Demand
The lower the price, the more consumers are willing to buy.
Law of Supply
The lower the price, the less producers are willing to produce (make).
Producers of the same or very similar products
How competition affects prices
Competition lowers prices
Examples of fixed costs for a business
rent, machinery, insurance
Examples of variable costs for a business
wages for employees, raw materials for making goods
A situation in which consumer demand is sensitive to changes in price (a small change in price affects how much people are willing to buy)
A situation in which consumer demand does NOT depend on the price (gas, toilet paper, etc.)
3 conditions necessary for demand
--want or need
--willingness to pay
--ability to pay
How does competition affect consumers?
Generally results in lower prices and better quality, which is good for consumers.
How does competition affect producers?
Forces them to evaluate their prices and quality; could result in lower profits.