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the law of supply
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As the price of a good rises; the quantity supplied of the good rises; and as the price of a good falls, the quantity supplied of the good falls. When prices go up you want to sell more
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direct relationship
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when one goes up the other goes up (supply)
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Market clearing/equilibrium price/point
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the point on the supply and demand graph where the demander and supplier agree on price. the point where everything is ideal
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indirect relationship
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when one goes up the other goes down (demand, because if the price is lower the quantity demanded goes up but if the price goes up the quantity demanded goes down)
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the law of demand
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as the price of a good rises, quantity demanded of that good falls, as the price of a good falls, quantity demanded of that god rises, ceteris paribus- "with other things the same," or "all other things being equal or held constant." OR ASSUMING NOTHING ELSE CHANGES
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demand elasticity and in-elasticity
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sensitivity to price change. if someone is buying an item that is taking up alot of their income they, the demander, is sensitive to the price of the product.
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Break-even Calculation
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price charged-variable cost= profit margin total fixed costs/profit margin = breakeven numberbreakeven number X price = Breakeven dollars
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An elastic supply curve
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is flat
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Demand
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1) the willingness and ability of buyers to purchase different quantities of a good (2) at different prices (3) during a specific period of time.
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incentives
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get the demander to buy more of a product something that they get in return for buying the product
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factors that change supply of products and services (shift curve left and right)
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changes in price of relevant resources, technology, number of sellers, expectations of future prices, taxes, subsidies,and government restrictions
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Supply vs. Quantity supplied
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changes in supply cause a shift changes in quantity supplied is a movement along the curve
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factors that change demand for products and services (shift in curve left or right)
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changes in income, preferences, price of related goods(substitutes and complements), number of buyers, expectations of future price
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Marginal Cost Calculation
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cost to create your item//product
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An elastic demand curve
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is flat
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total costs
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fixed and marginal, everything you put into the company
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surplus
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when you have to much of a product/service/resource price floors do this
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The Law of Diminishing Marginal Utility
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for a given time period, the marginal (additional) utility or satisfaction gained by consuming equal successive units of a good will decline as the amount consumed increases.
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the effects of price ceilings and price floors
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surplus and shortage
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what determines demand elasticity?
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the consumer and the pricing of the product
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Market
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the process of having sellers and buyers together, not necessarily physically, it can be over the internet or in some other form
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Supply
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the (1) willingness and ability of sellers to produce and offer to sell different quantities of a good (2) at different prices (3) during a specific period of time
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demand vs. quantity demanded
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change in demand: shifts entire curvechange in quantity demanded: o A movement from one point to another point on the same demand curve (change in price)
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Variable Costs
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costs that change according to the activity/volume of the business and production (extra cost in dollars per item OR average item cost)
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the effect of shifts of Demand and/or Supply on Market-clearing Price and Quantity
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the clearing price changes when there is a shift of either the supply and/or demand curve
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Opportunity Cost in Production
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the value of what is forgone when choosing to produce
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Elasticity
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sensitivity to price changeaffects the quantity supplied or demanded
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fixed costs
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all the costs that aren't directly related to what you are selling for example: chairs, banners, markers etc.
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shortage
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not enough of something. price ceilings create this
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