Equilibrium: the point in which the supply and demand curve intersect
Shortage QD > QS
Surplus QS > QD
Price Floor: A government imposed price limit on how low a price can be charged for a product.
Price Ceiling: A government imposed limit on how high a price is charged for a product.
Fixed Cost: A cost that does not change no matter how much is produced (Ex: Rent, Mortgage, Insurance, Car note)
Variable Cost: A cost isn't definite (Ex: Gas, Electricity Bills, Cell phone bills)
Marginal Cost: The cost of producing one more unit of a good (New Total Cost - Old Total Cost)
FORMULAS
TC = TFC + TVC
AFC = TFC/Q
AVC = TVC/Q
ATC = AFC + AVC or TC/Q
Watch the video below to help you better understand Equilibrium:
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