- Shortage: QD > QS
- Surplus: QS > QD
- Equilibrium: Point at which supply curve and demand curve intersect; economy using resources efficiently
- Price Ceiling: Government imposed limit on how high you can charge for product/service.
Price Ceiling Graph:
Price Floor Graph:
- Price Floor: Happens above equilibrium. (Ex. Minimum Wage) PxQ
- Fixed Cost: Cost that does not change no matter how much is produced . (Ex. Rent, Mortgage, Car note)
- Variable Cost: Cost that fluctuates; up and down change. (Ex. Gas, water bill)
Equations:
Marginal Cost: New TC- Old TC
Total Cost: TFC + TVC
AFC: TFC/Q
AVC: TVC/Q
ATC: AFC + AVC OR ATC/Q
New TC: Old TC + MC
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