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MARGINAL COST CURVE: A curve that graphically represents the relation between marginal cost incurred by a firm in the short-run product of a good or service and the quantity of output produced. This curve is constructed to capture the relation between marginal cost and the level of output, holding other variables, like technology and resource prices, constant. The marginal cost curve is U-shaped. Marginal cost is relatively high at small quantities of output, then as production increases, declines, reaches a minimum value, then rises. This shape of the marginal cost curve is directly attributable to increasing, then decreasing marginal returns (and the law of diminishing marginal returns).
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Lesson 5: Demand | Unit 4: Determinants
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Page: 16 of 20
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The five determinants that cause the demand curve to shift are:- Income: Income affects the ability of buyers to buy. It can affect a good in two ways-normal or inferior.
- Preferences: Preferences, our likes and dislikes, affect the willingness of buyers to buy.
- Prices of other goods: Other goods can be either substitutes or complements to the good we're analyzing.
- Expectations: Buyers' current demand depends on expectations of future prices.
- Number of buyers: More buyers, more demand. Fewer buyers, less demand.
These categories include all factors other than price that affect demand.
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INCOME EARNED BUT NOT RECEIVED The three types of income earned but not received (IEBNR) by the factors of production are Social Security taxes, corporate profits taxes, and undistributed corporate profits. IEBNR is subtracted from national income to calculate personal income.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time at a dollar discount store looking to buy either a remote controlled World War I bi-plane or a wall poster commemorating Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki. Be on the lookout for infected paper cuts.
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This isn't me! What am I?
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A half gallon milk jug holds about $50 in pennies.
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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AS-AD
Aggregate Supply-Aggregate Demand Model
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