Equilibrium

January 16, 2015

Equilibrium: Point in which the supply and demand curve intercept. "All resources are being used efficiently"

• Shortage  QD > QS     Quantity Demanded > Quantity Supply
• Surplus  QS > QD     Quantity Supply < Quantity Demanded

Terms :

• Price Floor is a government imposed price limit on how low a price can be changed for a product 

• Price Ceiling is a government imposed limit on how high a price can be charged for a product.

• Fixed Cost is a cost that does not change no matter how many are produced.

• Variable cost is a cost that changes.

• Marginal Cost is a cost of producing one more unit of goods.

• Marginal Revenue is the additional income from selling one more until of a good.

Formulas: 

• Total Cost: Total Fixed Cost + Total Variable Cost  &  Average Total Cost / Quantity
• Average Fixed Cost: Total Fixed Cost / Quantity 
• Average Variable Cost: Total Variable Cost / Quantity
• Average Total Cost: Average Fixed Cost + Average Variable Cost  &  Average Variable Cost
• Marginal Cost: New Total Cost - Old Total Cost 
• Total Revenue: Price x Quantity