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TOTAL REVENUE AND TOTAL COST: A profit-maximizing firm produces output where the difference between total revenue and total cost, that is economic profit, is the greatest. This total revenue and total cost approach to identifying profit-maximizing production can be accomplished using either a table of numbers of a set of curves. However, the end result is the same. Profit-maximizing production takes place at the quantity generating the greatest difference between total revenue and total cost. An added benefit of performing the analysis with curves, however, is the observation that profit-maximizing production occurs where the slopes of the total revenue and total cost curves are equal.
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Lesson 12: Elasticity and Demand | Unit 5: Other Measures
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Page: 23 of 25
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Topic:
Income Elasticity Of Demand
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- How responsive is my demand to this change in my income? To answer these questions, we need the income elasticity of demand.
- Income elasticity of demand is the relative response of demand to changes in income.
- Or stated in percentage terms: the income elasticity of demand is the percentage change in demand resulting from a percentage change in buyers' income.
- For a normal good, income elasticity is positive, meaning that an increase in income leads to an increase in demand.
- For an inferior good, income elasticity is negative, meaning that an increase in income leads to a decrease in demand.
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PRODUCTION The process of transforming the natural resources of the land into consumer satisfying consumption goods or productive capital goods. This transformation process involves the four scarce resources or factors of production--labor, capital, land, and entrepreneurship. Although production is generally the physical transformation of materials, it often involves the spatial relocation, or transportation, of commodities, as well.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time calling an endless list of 800 numbers trying to buy either a pair of red goulashes with shiny buckles or a handcrafted bird feeder. Be on the lookout for pencil sharpeners with an attitude.
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This isn't me! What am I?
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Helping spur the U.S. industrial revolution, Thomas Edison patented nearly 1300 inventions, 300 of which came out of his Menlo Park "invention factory" during a four-year period.
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"Inside the ring or out, ain't nothing wrong with going down. It's staying down that's wrong. " -- Muhammad Ali
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ADR
American Depositary Receipt, Asset Depreciation Range
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