Supply and Demand -

Supply and Demand - 

• Supply - the quantity that producers of sellers are willing and able to produce or sell at various prices (always a upward sloping graph)

• Demand - the quantities that people are willing and able to buy at various prices (always a downward sloping graph)

• The Law of Supply - 
• there is a direct relationship between price and quantity supply
• if price increases, quantity increases
• if price decreases, quantity decreases

• The Law of Demand - 
  
  • there is an inverse relationship between price and quantity demanded
  • if price increases, quantity decreases
  • if price decreases, quantity increases
  
  
• What causes a "change in quantity supplied"? (△QS)
  

  • △ in price

  
  
• 
  

  What causes a "change in quantity demanded"? (△QD) 

  • △ in price

  
  
• What causes a "change in supply"? (△S)
• supply increases, shift right on graph
• supply decreases shift left on graph
• Determinants
1. △ in # of sellers
2. △ in the costs of production (salary, wages, electricity, etc.)
3. △ in technology
4. △ in weather (natural disaster, bug infestation, rain, etc.)
5. △ in taxes or subsidies
6. △ in expectations

• What causes a "change in demand"? (△D)
• demand increases, shift right on graph
• demand decreases shift left on graph
• Determinants:
1. △ in buyers taste (advertisements)
2. △ in the # of buyers (population)
3. △ in income (Normal Goods- goods that buyers buy more of when their income rises/ Inferior Goods- goods that buyers buy less of when income rises)
4. △ in the price of related goods (Substitute Goods- goods that serve roughly the same purpose to buyers/ Complimentary Goods- goods that are often consumed together)
5. △ in expectation (future)
• Total Revenue- Price X Quantity 
• Fixed Cost- a cost that does not change no matter how much is being produced
• Variable Cost- cost that rises or falls depending on how much is produced
• Marginal Cost- cost of producing one more unit of a good
• Marginal Revenue- (new Total Revenue) - (old Total Revenue)

• More formulas for finding costs
• a = averge
• q = quantity
• t = total
• c = cost
• f = fixed
• v = variable
• m = marginal
• tc = tfc + tvc
• atc = afc + avc
• tfc / q = afc
• tvc / q = avc
• tc / q = atc
• △tc / △q = new tc - old tc
• tfc = afc * q
• tvc = avc * q
• tc = ac * q