Economics 12: Unit 2 (Microeconomics)

the part of economics concerned with single factors and the effects of individual decisions.

the market in which households purchase the goods and services that firms produce. (Goods, Services)

the market in which firms purchase the factors of production from households (Labour, Capital)

The interactions and exchanges between buyers and sellers.

an increase in price results in an increase in quantity supplied (The more you can sell something for, the more you will produce said good)

- Production costs (Land labour capital etc)
- Number of sellers (Amount of competition)
- Technology (Efficiency of production)
- Taxes and subsidies (Government assistance)
- Expectations (Producer forecasting)
- Price of related goods (Tennis balls - Tennis Racquets)

As the price of goods increase, the quantity demanded will decrease.

- Income (Financial wellness of target market)
- Population (Size of market)
- Tastes and Preferences (Demographic of market)
- Price of Substitute goods (Products that can be replaced with other products)
- Price of Complimentary goods (Products that go with eachother)
- Consumer expectations (Consumer forecast of product)

Where supply and demand meet, will result in no surplus and no shortages.

E: Qs=Qd

A situation in which quantity supplied is greater than quantity demanded

Su: Qs>Qd

A situation in which quantity demanded is greater than quantity supplied

Sh: Qs<Qd

Quantity increases, and equilibrium price decreases.

Quantity decreases, and equilibrium price increases.

Quantity increases, and equilibrium price increases.

Quantity decreases, and equilibrium price decreases.

Quantity increases, and equilibrium price is indeterminate. (Can go up or down）

Quantity decreases, and equilibrium price is indeterminate. (Can go up or down)

Quantity is indeterminate (Can go up or down), and equilibrium price decreases.

Quantity is indeterminate (Can go up or down), and equilibrium price increases.

How consumers respond to change in price.

Substitutability - (Can this product be replaced with another product)
Time frame - (How much time it takes to consider a purchase)
Income share - (The amount of discretionary income a purchase costs)
Luxury vs Necessity - (How much consumers need a particular product)
Narrowness of market* - (How narrow or broad your market is) EX. Producer selling apples belongs in both the food market and the apple market, making them more broad.

difference between revenues and expenses

Profit: TR-TC

The method of production which uses the fewest inputs.

the method of production which has the lowest cost

Factors where quantities CANNOT be varied within the period under consideration

Factors where quantities CAN be varied within the period under consideration.

the time period in which at least one input is fixed

the period in which all inputs can be varied

Raw materials - Variable (Easily accessible in most cases)
Labour - Variable (Jobs are always in demand, easy to hire someone)
Machinery - Fixed (Hard to get machinery quickly, needs to be shipped in most cases)
A factory (Land) - Fixed (Expanding or Condensing is a time-consuming process)

total output produced by the firm over a period of time

The change in total product resulting from the addition of 1 extra unit of variable factor (The benefit of adding one extra worker etc)

The total product divided by number of variable factors (total output per unit of variable factor)

the point where adding additional resources does not increase productivity/utility - "the point where we become less productive"

The idea that a firms will gravitate towards the most inexpensive factors of production.

If capital is cheaper than labour, the firm will tend to use more capital and vice versa (Ex. Using automated telemarketing messages instead of an actual salesperson)

payments made for the factors of production, which the firm uses to produce goods and services.

Costs that requires money use and spending. ($) Include all costs of operation

Costs that do not require money spending (Time, opportunity cost)

TFC are costs that do not change as output changes, these costs always stay the same (Rent, electricity bill etc.)

Costs that vary with the level of output, these costs change overtime. (Payments for raw materials)

the sum of fixed cost and variable cost

TC = TFC + TVC

Consumers determine through purchases what goods and services will be produced. (When producers listen to consumer demands)

the total cost divided by units of output

the total variable cost divided by units of output

the total fixed cost divided by number of units

the cost of producing one more unit of a good