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Monthly Archives: March 2012

Equilibrium:  the condition of a system in which competing influences are balanced. this on the graph is where the supply and demand curves intersect. its the point where they intersect where they are balanced.

Equilibrium price: The market  price at which the supply of an item  equals the quantity  demanded. This on the graph Is the equilibrium, where the price of the supply is equal to the quantity.

Equilibrium Quantity: The quantity demanded and supplied at the equilibrium price, where demand equals supply.

Surplus: Surplus means when there is more supply than demand, as in extra resources. this on the graph is where the supply on the left of the line and below the equilibrium is more than demand.

Shortage: a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, a shortage occurs when there is excess demand; therefore, it is the opposite of a surplus.

Supply is The quantities of a particular good or service producers are willing and able to supply at all possible prices at a particular time.

the difference between supply and quantity supplied with supply the producers supply more of a good at a higher price than they do at lower price, and the higher the price the higher the quantity supplied.

the 6 determinates of supply are

1.Resource prices:  Resource prices affect the cost of production. As resource prices increase, cost of production increases and producers are less willing to make goods at a higher cost unless they recieve higher prices.

2.Technological changes:  Improved technology usually means a lower cost of production.

3.Number of producers:  If more producers enter a market, the supply will increase, shifting the supply curve to the right.

4.Prices of other products in the firm:  If a firm produces more than one product, a change in the price of one product can change supply of another.

5.Producer expectations: Changes in producer’s future expectations can cause a change in supply.

6.Government

-Subsidies: Government payment that supports a business or market.

-Excise Tax: Gov’t tax on production/ sale of goods.

-Regulation: Gov’t intervention in a market affecting the production of a good.

I am a skate shop owner and board shaper. To gain the materials and resources to make a board i would need to find out what wood is best to make a board ,and if i wanted, try different combinations of different woods to increase the strength of the board. If I buy a machine that will shape and crave my boards into the right form then the need for workers would be low, i wouldnt have to spend as much money to make them as i would with a dozen workers. I would also end up with competition, other skate board shops and companies that want to make a better board than me or copy the board that i make to make a profit for them selves.  i can also come out with a clothing line to increase income so i can pay to make better boards, i can also sell trucks and wheels fot the board and add the cost of those onto the price of the deck its self. as a producer i expect my boards to be the best because i made them the way they are for a reason, if my income decreases a little because the number of consumers i get dropped then the expectation of my product is that its not good. and last the gvernment, i think the only thing the government affects with my business is the regulation of wood because theres a environmental factor somewhere in there.

4 things that determine elasticity are:

1.necessities Vs. Luxuries

2.Availability of substitutes

3.How much of our income a good takes

4.The passage of time

Inelastic Demand: Quantity doesnt change with a change in price.

Elastic Demand: Quantity changes by a greater percentage than the percentage change in price.

What is more elastic, A BMW or a gallon of milk? A BMW is based on both necessities Vs. luxuries, and how much of income a good takes. Milk is based on Availability of substitutes and necessities Vs. Luxuries. So the more elastic of the two is the milk because as the price goes down the larger the quantity. This doesnt apply to the bmw I think because as the price goes down the quantity goes up but by very little and the quality isnt as good.