Marginal Reasoning

determinants of supply

-Cost of inputs. Cost of supplies needed to produce a good. ... -Productivity. Amount of work done or goods produced. ... -Technology. Addition of technology will increase production and supply. -Number of sellers. If number of sellers increases, supply will increase. ... -Taxes and subsidies. ... -Government regulations. ... -Consumer Expectations.

Determinants of demand

-The price of the good or service. -Prices of related goods or services. These are either complementary (purchased along with) or substitutes (purchased instead of). -Income of buyers. -Tastes or preferences of consumers. Expectations.

Economists Assume that individuals

Act in their own self interests.

price discrimination

a firm charges different customer groups different prices for the same exact product 1. firm must be able to clearly distinguish between two groups 2. firm must ensure that the two groups cannot trade the product.

costs that do not vary with output and cannot be avoided

fixed costs

Rational People make decisions by comparing

marginal costs and marginal benefits.

marginal

means extra or additional

economics generally assume that individuals seek to maximize _______ and that businesses seek to maximize _____

utility, profit