Law of Demand- states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant.
Law of supply- is a fundamental principle of economic theory which states that, all else equal, an increase in price results in an increase in quantity supplied.
Diminishing marginal utility- the marginal utility of a good or service is the gain from an increase or loss from a decrease in the consumption of that good or service. Economists sometimes speak of a law of diminishing marginal utility, meaning that the first unit of consumption of a good or service yields more utility than the second and subsequent units, with a continuing reduction for greater amounts.
Profit motive- is an economic concept which posits that the ultimate goal of a business is to make money. Stated differently, the reason for a business’s existence is to turn a profit.
Total revenue- is the total receipts of a firm from the sale of any given quantity of a product.
It can be calculated as the selling price of the firm’s product times the quantity sold, i.e. total revenue = price ? quantity, or letting TR be the total revenue function:
Total cost-describes the total economic cost of production and is made up of variable costs, which vary according to the quantity of a good produced and include inputs.
Elasticity-is the measurement of how responsive an economic variable is to a change in another.
Point elasticity-is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price.
Difference between elasticity and point-Point elasticity of demand takes the elasticity of demand at a particular point on a curve (or between two points). Arc elasticity measures elasticity at the mid point between the two selected points.
Shortage-is a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, a…