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Demand

This document defines several economic terms: - Total cost is all expenses to produce a product including initial costs and opportunity costs. - Fixed costs do not change with production volume, like rent. Variable costs change with production. - Marginal cost is the cost of the next unit produced. Average cost is total cost divided by units produced. - Marginal revenue is the change in revenue from one additional unit sold. Average revenue is total revenue divided by units sold.

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141 views2 pages

Demand

This document defines several economic terms: - Total cost is all expenses to produce a product including initial costs and opportunity costs. - Fixed costs do not change with production volume, like rent. Variable costs change with production. - Marginal cost is the cost of the next unit produced. Average cost is total cost divided by units produced. - Marginal revenue is the change in revenue from one additional unit sold. Average revenue is total revenue divided by units sold.

Uploaded by

Ayu Puspita
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Nama : Hafiza Putri Khalid

No bp : 1810533024

What is Total Cost?


Definition: Total cost is an economic measure that sums all expenses paid to produce a
product, purchase an investment, or acquire a piece of equipment including not only the
initial cash outlay but also the opportunity cost of their choices.

What is a 'Fixed Cost'


Definition: A fixed cost is an expense or cost that does not change with an increase or
decrease in the number of goods or services produced or sold. Fixed costs are expenses that
have to be paid by a company, independent of any business activity. It is one of the two
components of the total cost of running a business, the other being variable costs.

What is Variable Cost?


Definition: A variable cost is an expense that rises or falls in direct proportion to
production volume. Variable costs differ from fixed costs, which remain the same even as
production and sales volume changes.

What is a Marginal Cost?


Definition: Marginal cost is the additional cost incurred for the production of an
additional unit of output. The formula is calculated by dividing the change in the total cost by
the change in the product output.

What is a Average Cost?


Definition: The Average Cost is the per unit cost of production obtained by dividing the
total cost (TC) by the total output (Q). By per unit cost of production, we mean that all the
fixed and variable cost is taken into the consideration for calculating the average cost. Thus,
it is also called as Per Unit Total Cost.

What is Marginal Revenue?


Definition: Marginal revenue is an economic metric defined as the increase in a
company’s gross revenue from selling one additional unit of its product. It can be more easily
defined as the variation of the revenue figure after one more unit is sold.

What is average Revenue?


Definition: Average revenue is the revenue generated per unit of output sold. It plays a
role in the determination of a firm's profit. Per unit profit is average revenue minus average
(total) cost. A firm generally seeks to produce the quantity of output that maximizes profit.
What is demand?
Definition: Demand in economics is the consumer's desire and ability to purchase a good
or service. It's the underlying force that drives economic growth and expansion. Without
demand, no business would ever bother producing anything.

Characteristics of Demand:
There are thus three main characteristic's of demand in economics.
(i) Willingness and ability to pay. Demand is the amount of a commodity for which a
consumer has the willingness and also the ability to buy.
(ii) Demand is always at a price. If we talk of demand without reference to price, it will be
meaningless. The consumer must know both the price and the commodity. He will then be
able to tell the quantity demanded by him.
(iii) Demand is always per unit of time. The time may be a day, a week, a month, or a year.

What is supply?
Definition: Supply is a fundamental economic concept that describes the total amount of
a specific good or service that is available to consumers. Supply can relate to the amount
available at a specific price or the amount available across a range of prices if displayed on a
graph. This relates closely to the demand for a good or service at a specific price; all else
being equal, the supply provided by producers will rise if the price rises because all firms
look to maximize profits.
Characteristics of Demand:
1.the amount of goods or services offered or sold by the manufacturer
2.the amount of goods offered influenced by technological progress,production costs,and
availability of goods
3.the supply curve stretches from bottom left to top right

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