Definitions
Fixed cost
Cost that does not depend on output
Total cost is found by:
Adding fixed and variable costs
Who implements price controls?
Governments
A change in number of consumers causes a shift in what?
Demand
Cigarettes, Medication, Gasoline, and Eggs are all examples of:
Inelastic goods
Demand
Ability and willingness to consume at all prices
Total Revenue is found by
Multiplying Price per unit by unit/output
Minimum wage is an example a
Price floor
The power goes out at a lightbulb factory, this causes what in the market for lightbulbs
Left shift in supply
What does a perfectly elastic graph look like?
Straight line across // horizontal // Flat
Law of Demand
Inverse relationship between price and quantity
"As price goes up Quantity Demanded goes down."
One of the three variable costs we discussed in class is
Utilities or Wages or Materials
When Quantity supplied is greater than quantity demanded it is a
Surplus
Used cars are an inferior good, if average income increases what happens in the market for used cars?
Demand shifts Left
If increasing price causes no change in quantity demanded, what does that mean for your good?
Perfectly Inelastic
Equilibrium
Where quantity demanded meets quantity supplied
Profit maximization occurs when
Marginal Cost equals Marginal Revenue (After the Points of Diminishing Returns)
Where must a price floor be?
Above equilibrium
The price of Apple phones goes up, what happens in the market for Samsung phones?
Demand shifts right
You find an elasticity coefficient of 1.3 what does this mean in terms of elasticity?
Elastic
Price Floor
Lowest price the government will allow
The point of diminishing returns is:
Where marginal cost is at its lowest
A price ceiling creates what kind of economic effect?
Shortage
Milk and cookies are compliments of each other if the price of Milk decreases what happens in the market for Milk?
Shift along the Demand curve // Change in Quantity Demanded // No change in market
P 40. Q.4
P 50. Q.2
Is demand elastic or inelastic?
elastic