Clark's Cleaners is a housekeeping service. The company's expenses could include what? What does it not include?
answer
Cleaning supplies and any equipment the company purchases.
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South Avenue Publishing produces self-help books. The company's profit is what?
answer
Money the company earns after paying all of its production costs.
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What is the difference between profit and revenue?
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Revenue is the total amount producers receive after selling a good. Profit is the total amount producers earn after subtracting the production costs.
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What is the best definition of marginal benefit?
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The possible income from producing an additional item.
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What is the best definition of marginal revenue?
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The additional income gained from selling an additional good.
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What is the best definition of marginal cost?
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The price of producing one additional unit of good.
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What is the difference between marginal cost and marginal revenue?
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Marginal cost is the money paid for producing one more unit of a good. Marginal revenue is the money earned from selling one more unit of a good.
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In order to calculate marginal cost, producers must compare the difference in the cost of producing one unit to the cost of?
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Producing the next unit.
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Producers must understand the marginal benefit of making an additional unit, which shows what?
answer
Possible gain.
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The chart shows the marginal revenue of producing apple pies.
According to the chart, the marginal revenue?
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Remains the same as production increases.
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To generate higher profit margins, producers must work to what?
answer
Decrease their production costs.
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The point of maximum profit is the point at which the marginal cost equals the?
answer
Marginal revenue.
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The Davis family grows organic vegetables to sell at a local farmer's market. What are factors that directly affect their profit?
answer
-An increase in the cost of farm equipment
-A rise in demand for organic produce
-n increase in customers at the market
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What are ways producers can maximize their profit?
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They can work to decrease their marginal cost. They can raise prices to increase marginal revenue.
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To calculate profit, producers subtract is the total production cost from there?
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Total revenue.
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The chart shows the marginal cost of producing apple pies.
According to the chart, the marginal cost of producing the second pie is?
answer
.50
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Producers often work to maximize their __________ and make them as large as possible.
answer
Profits.
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In economics, if a good is inelastic, how does that impact it?
answer
Its supply or demand is not sensitive to price changes.
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Tasty Treat Tea is a popular iced tea drink. When the manufacturer begins to use imported tea leaves, the price rises by 10%, and the quantity demanded falls by 20%. The fact that quantity demanded changed by more than the price change suggests what?
answer
The demand for tasty treat tea is elastic.
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In the market, actions known as incentives affect who?
answer
Consumers and producers.
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Describe incentives?
answer
An action, system, advertisement, belief, etc.. that is intended to change the behavior of another person (in other words, incentives attempt to get people to do something or not do something.)
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Give some examples of positive incentives for consumers?
answer
Reward for finding a lost dog, a coupon for buy one item and get one free, a free umbrella.
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Give some examples of a negative incentive for producers?
answer
A sharp increase in production costs.
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How could consumers respond to a negative incentive?
answer
Avoid additional charges.
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Explain how elasticity and incentives work together?
answer
An elastic good, such as a game, is more likely to respond to incentives.
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What is the difference between a price floor and a price ceiling?
answer
A price ceiling is the maximum legal price that can be charged for a product. Rent controlled apartments are an example of a good that has a price ceiling. A price floor is the lowest legal price that can be paid for a good or service.
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Price controls on goods can be set by?
answer
Governments.
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The lowest amount a manufacturer can pay factory workers is an example of what?
answer
A price floor.
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The graph shows the price of a good compared to the quantity demanded and the quantity supplied.
On this graph, the top horizontal line represents what?
answer
A price floor set above equilibrium.
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The graph shows the price of a good compared to the quantity demanded and the quantity supplied.
On this graph, what does the green arrow represent?
answer
The flow of money.
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The government has set a price floor on bread. Manufacturers cannot sell loaves for less than $5.00, which is a dollar above the market price. What will most likely result from this price control?
answer
The demand for bread will fall, which could result in an excess supply.
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The graph shows the price of green tea compared to the amount supplied by producers.
What does this graph suggest about green tea about its elasticity and how supply changes with price?
answer
Businesses need to use limited resources wisely.
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Why would a pair of stylish sneakers be considered a want?
answer
Because it's not a necessity.
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____is a reward or punishment that encourages people to behave in certain ways.
answer
Incentive.
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Equilibrium is when?
answer
When the rate of the forward reaction equals the rate of the reverse reaction.
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Supply and demand coordinate to determine prices by working?
answer
Together.
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On a graph, an equilibrium point is where?
answer
A supply curve and a demand curve meet.
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The graph shows demand.
In order to achieve equilibrium, what else must be included on the graph?
answer
Supply curve.
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The graph shows a point of equilibrium.
If the quantity supplied is greater than the quantity demanded, what must happen to the price in order to reach equilibrium?
answer
The price of the product will decrease to meet equilibrium.
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The graph shows a point of equilibrium.
What does "P" represent on the graph?
answer
The price at the equilibrium point.
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The graph shows a point of equilibrium.
What does "Q" represent on the graph?
answer
The price at the equilibrium point.
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The graph shows a point of equilibrium.
How many goods must be supplied to achieve equilibrium?
answer
15
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Disequilibrium occurs when?
answer
Supply and demand are out of balance.
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What happens when the quantity of a good supplied at a given price is greater than the quantity demanded?
answer
Excess supply.
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The graph shows excess supply.
Explain why the price indicated by p2 on the graph is higher than the equilibrium price?
answer
As prices rise, demand goes down.
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The graph shows excess supply.
What needs to happen to the price indicated by p2 on the graph in order to achieve equilibrium?
answer
It needs to be decreased.
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The graph shows excess demand.
Explain why the price indicated by p2 on the graph is lower than the equilibrium price?
answer
As prices fall, demand goes up.
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Explain the connection between the law of demand and excess demand?
answer
The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand.
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The graph shows excess demand.
What needs to happen in order to stop disequilibrium from occurring?
answer
The price of goods needs to be increased.
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Both excess supply and excess demand are a result of?
answer
Disequilibrium.
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A car dealer who does not have enough customers for a supply of new cars faces what?
answer
Disequilibrium.
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A limited amount of goods available means that excess what is occurring?
answer
Demand.
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On a graph, a(n) ______ shows the demand portion of equilibrium.
answer
Demand curve.
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The total amount of a product available in the market at a given price is called?
answer
Supply.
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According to the law of supply, price and quantity move?
answer
Along a track in the same direction.
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A market supply schedule shows?
answer
The prices and quantity in an entire market..
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What factors can most directly affects a furniture company's supply?
answer
The availability of raw materials.
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The graph examines the market for graphic T- shirts.
The graph shows?
answer
A decrease in the quantity of a product in the market.
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Explain the law of supply?
answer
The principle that, other things equal, an increase in the price of a product will increase the quantity of it supplied, and conversely for a price decrease; directly related.
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The amount of goods and services consumers want is called the?
answer
Demand.
question
Look at the graph examining the market for graphic T-shirts.
At what quantity and price does equilibrium appear on this graph?
answer
$9.
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