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Raw Materials
Unprocessed natural products used in production
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Variable Cost
A cost that changes when the business rate of operation or output changes
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Production Function
Relationship between changes in output to different amounts of a single input while other inputs are held constant
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Stages of production
Increasing returns, diminishing returns, and negative returns
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e-commerce
Electronic business or exchange conducted over the internet
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Fixed Cost
Cost that a business acquires even if plant is stagnant and output is zero
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Overhead
Total fixed cost
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Marginal Analysis
Type of cost-benefit decision making that compares the extra benefits to extra costs of an action
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Total Cost
Extra cost acquired when a business porduces one additional product
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Marginal Cost
Extra Cost of producing one additional unit of production
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Price
Signal to both producers and consumers. Decides WHAT, HOW, and FOR WHOM.
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Total Revenue
Total Receipts; price of goods sold times quantity sold
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Marginal revenue
Extra revenue associated with the production and sale of one addition unit of output.
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Rebate
Partial refund of original price of product
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Break even point
Total product the business needs to sell in order to cover its total costs
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Ration coupon
Lets holder purchase certain amount of a product
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Surplus
Quantity supplied is greater than quantity demanded
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Rationing
Decides "fair share"
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Market Equilibrium
Prices are stable, and quantity of output supplied is equal to quantity demanded
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Price Ceiling
(Fixed Price), below equilibrium price
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Economic Model
Helps analyze behavior and predict outcomes. (w/ Supply and Demand curves)
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Equilibrium price
Price where quantity supplied equals quantity demanded; price that clears the market
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Target price
Price floor for farm products
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