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26 Cards in this Set

  • Front
  • Back
movement along the demand curve
raise or lower the price(and only the price)
shift in demand curve
if a factor such as consumer tastes, availabilty of substitutes, and consumer income. The new demand curve is made
total revenue =
total revenue = quanity sold * price
average revenue =
average revenue = total revenue / quanity sold

(this also represents the demand curve)
marginal revenue =
marginal revenue = change in total revenue / 1 unit increase in quantity-marginal revenue curve always falls twice as fast as the demand curve
elasticity =
elasticity = %change in quantity demanded / % change in price
inelastic demand:
e<1. a change in price only leads to only a small change in quantity demanded. slight increase or decrease will not significantly affect quantity demanded.
elastic demand
e>1. a change in price leads to a large change in quantity demanded. ex.(slight decrease in price results in large increase in demand or units sold.)
If a demand for a product is inelastic...what happens to price?
-increase in price: increase revenue
-decrease in price: decrease revenue
if demand is elastic...what happens to price?
-increase in price: decrease revenue
-decrease in price: increase in revenue
factors influencing price elasticity
-presence of substitute products..more substitutes for a product =more sensitive the price elasticity will be
-realtionship of price w/ customers dispossable income
fixed costs
stable and dont very with products sold or made
variable costs
depend directly on products sold or made
total cost
sum of fixed cost + variable costs
marginal cost
change in total cost as a result of producing an additional product
-change in total cost / 1 unit increase in quantity
marginal analysis
comparison of marginal revenue and marginal cost -> fiding point of max. profit
maximum profit
when marginal costs = marginal revenue
-beyond or below this will decrease profit
break even analysis
analyzes b/t total revenue and total cost to determine profitability at various levels of output
break even point(formula)
-when total revenue and total cost are equal.
Break-even point = Fixed Cost / (unit price - unit variable cost)
why has travel industry stayed in
1. saving time
2. saving money
demand curve
graph relating the quantity sold and price, which shows the max number of units that will be sold at a given price.
demand factors besides price -3
1. consumer tastes
2. price and availability of similar product
3.consumer income
unitary demand
% change in price is identical to % change in quantity demanded and sales rev. stays the same e = 1
products and services
inelastic bc they are neccesities
things that are really exspensive and requrie lots of cash
break even chart
graphic representation of the break even analysis