PROFIT
What is profit?
Profit is the money that producers make after covering their production costs.
As prices increase, the quantity supplied ________.
increases.
As price increases, the quantity demanded _______.
decreases.
How is profit calculated?
Profit is calculated by subtracting the total production costs from revenue.
As prices decrease, the quantity demanded _______.
decreases.
As price decreases, the quantity demanded _______.
increases.
What is revenue?
Revenue is the amount that producers receive when selling a good.
List at least five factors that cause a change in supply.
Cost of inputs, productivity, technology, taxes and subsidies, expectations, government regulations, number of sellers
List at least five factors other than price that cause a change in demand.
Consumer income, consumer taste, substitutes, compliments, change in expectations, number of consumers
What is an example of a fixed cost?
Payment on debts, rents, and taxes
What is inelastic supply?
Inelastic supply occurs when the quantity of supplies does not change much with the price.
What is inelastic supply?
Inelastic supply measures how much change in price effects demand.
What is an example of a variable cost?
Electricity, labor, freight charges
What is elastic supply?
Supply elasticity is the measure of how producers and consumers behave in response to price changes.
What is inelastic demand?
Inelastic demand is when the demand for an item remains the same as the price changes.
What is total cost?
The sum of all the fixed and variable costs
How does competition affect producers?
Producers must compete with one another to sell their goods.
What is a demand schedule?
The demand schedule shows the link between demand and price for a consumer.