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26 Cards in this Set
- Front
- Back
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movement along the demand curve
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raise or lower the price(and only the price)
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shift in demand curve
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if a factor such as consumer tastes, availabilty of substitutes, and consumer income. The new demand curve is made
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total revenue =
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total revenue = quanity sold * price
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average revenue =
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average revenue = total revenue / quanity sold
(this also represents the demand curve) |
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marginal revenue =
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marginal revenue = change in total revenue / 1 unit increase in quantity-marginal revenue curve always falls twice as fast as the demand curve
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elasticity =
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elasticity = %change in quantity demanded / % change in price
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inelastic demand:
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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.
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elastic demand
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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.)
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If a demand for a product is inelastic...what happens to price?
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-increase in price: increase revenue
-decrease in price: decrease revenue |
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if demand is elastic...what happens to price?
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-increase in price: decrease revenue
-decrease in price: increase in revenue |
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factors influencing price elasticity
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-presence of substitute products..more substitutes for a product =more sensitive the price elasticity will be
-realtionship of price w/ customers dispossable income |
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fixed costs
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stable and dont very with products sold or made
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variable costs
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depend directly on products sold or made
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total cost
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sum of fixed cost + variable costs
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marginal cost
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change in total cost as a result of producing an additional product
-change in total cost / 1 unit increase in quantity |
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marginal analysis
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comparison of marginal revenue and marginal cost -> fiding point of max. profit
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maximum profit
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when marginal costs = marginal revenue
-beyond or below this will decrease profit |
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break even analysis
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analyzes b/t total revenue and total cost to determine profitability at various levels of output
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break even point(formula)
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-when total revenue and total cost are equal.
Break-even point = Fixed Cost / (unit price - unit variable cost) |
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why has travel industry stayed in dot.com
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1. saving time
2. saving money |
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demand curve
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graph relating the quantity sold and price, which shows the max number of units that will be sold at a given price.
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demand factors besides price -3
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1. consumer tastes
2. price and availability of similar product 3.consumer income |
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unitary demand
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% change in price is identical to % change in quantity demanded and sales rev. stays the same e = 1
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products and services
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inelastic bc they are neccesities
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things that are really exspensive and requrie lots of cash
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elastic
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break even chart
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graphic representation of the break even analysis
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