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supply

Amount of goods and services availabble
*What a is willing to produce depending upon his costs,demand,and potential profits

law of supply

Producer will produce make of product for a higher price/profit than they will when price/profit for their product falls

supply schedule

Tabular recording of the number of units of a good or service supplied at various prices by producers

supply curve

Graphic representation of the supply schedule
*Reflects how higher and lower prices have an effect on the supply of a good or service

market price

point at which goods and services are exchanged for money

equilibrium

point at which the amount of a product demanded by consumers equals the amount supplied by producer
*All wants for a good or service by consumers are satisfied at equilibrium
*market price at equilibrium is where producer makes his greatest profit

surplus

economic condition that occurs when producers supply more of a good (or service) than is demanded by consumers
*(A surplus drives price down)

shortage

economic condition that occurs when consumers demand more of a good (or service)
*(shortage drives prices up)

capacity

number of units of a product a factory can produce given its size,type of machinery, and number of workers

mechanization

substitution of capital goods (machines) for labor in the product in process

input

any resource that is used in the production process

productivity

a ratio of the amount of output per unit of input
*measure of how efficiently people work
*usually measured in "output per worker per hour"

technology

body of knowledge,skills,and where with - all that comprises the processes used in production
*application of science to industry,agriculture, and commerce which increases productivity and efficiency

research and development

company programs designed to produce new or improved products and to reduce production costs

economics of scale

reduction of production costs per unit as plant size increases (up to a point)
*savings that come from mass production

diminishing returns

stage of production where additional inputs produce successively smaller units of output

fixed costs

Constant costs which dont change with increases or decreases in production
*Also called "overhead"

variable costs

production costs that vary with changes in the quantity of output and increases or decreases in business

total costs

The sum of fixed costs and variable costs
*TC=FC+VC

demand

wants of a consumer at a particular time for a good or service

law of demand

All else being equal more items of any good or service will be sold at lower price than a higher price
*As the price of a good falls a larger quantity will be brought
*If price of good goes up, less of it will be sold

demand schedule

Tabular recording of the number of units of a good or service purchased at various prices

demand schedule ex

After wilson high school won the state 3-A (cost-$5.00/order 100t-shirts)

demand curve

Graphic representation of the demand schedule
*Illustrates how higher and lower prices after the demand for a good or service

price

money value of a good or service
*unit by which we measure relative scarcity
*determined by the interaction of demand and supply

elasticity

shows how much a change in price affects the quantity demanded

elastic (demand)

demand condition where %change in quantity demand for a good or service is more than the % change in price
*ER>1
*small change in price will have a relatively large change on quantity dmanded for a good or service

inelastic

demand condition where the % change in quantity demanded for a good or service is less than the % change in price
*ER<1
*Change in price will have a relatively small affect on the quantity demanded for a good or service

Unitary elastic (demand)

demand condition where the % change in quantity demanded for a good or service is less than the % change in price
*ER=1
*Illustrated by a 45 degree line on an economic demand model

perfectly elastic

demand condition where the change in quantity demanded varies from zero to infinity whenever there is a change in price
*Illustrated by a vertical line on an economic demand model

perfectly inelastic (demand)

demand condition where there is absolutely no change in the quantity demanded for a good or service with a change in price
*Illsturated by a vertical line on an economic demand model

utility

usefulness of a good or service
*Amount of satisfaction one gets from a good or service

diminishing marginal utility

point where the last item consumed will be less satisfying than the one before
*seeing a movie for a second or third time,last slice of pizza after hunger is gone,second soft drink after one's thirst has been satisfied etc.
*real income- amount of goods and services a person can purchase with his income

average costs

Total costs divided by the number of units of a good or service produced
*TC/#units=AC

revenue

money received from sales
*money taken in by a business or government

total revenue

sum of recipts from all units of a good (or service) sold in a given time period(day,week,month,quater,year)
*TR=PxQ

break-even profit

point where total revenue equals total cost
*TR=TC

profit

economic condition that occurs when total revenue is greater than total cost
*TR>TC

loss

economic condition that occurs when total revenue is less than total cost
*TR<TC or TC>TR

marginal revenue

The addition to total revenue from the sale of an extra unit of output

marginal cost

the addition to total cost from the production of an extra unit of output

maximum profit level

point reached when marginal revenue equals marginal cost
*MR=MC

short run

production period which is insufficient to adjust or change some factor inputs

long run

production period which is of sufficient length so all factor inputs can be adjusted or changed

business cycle

Periodic phases of change and fluctuation in an industrial economy which depicts business expansion and contraction
*(business cycle model reflects economic expansions,peaks,contractions,and troughs)

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