Unit One: Notes and Need-To-Knows 1/15/2015

Unit One: Supply and Graphs

Supply: quantities that produces are willing to produce or sell at various prices

Law of Supply: direct relation between price and quantity supply

Causes of Change in Supply:

1. Change in weather

2. Change in technology

3. Change in taxes and subsidies

4. Change in cost of production

5. Change in # of sellers

6. Change in Expectations

Equilibrium: line of demand and supply intersect; here, resources are being used efficiently

Shortage: demand is greater than supply

Surplus: supply is greater than demand

Price Floor: the top of the surplus area. it's a line. government imposed price control on how low someone can change for a service. 

Price Ceiling: bottom of the shortages area. government imposed price control on how high a price can be change for a product or service. 

Marginal Income: additional income of selling one more good

Fixed Cost: cost that does not change

Variable Cost: cost that changes as quantity changes

Marginal Cost: New Total Cost - Old Total Cost

Total Cost: Total Fixed Cost + Total Variable Cost