Lower average costs are a potent competitive advantage.Production costs per unit of output, computed by dividing the total of fixed costs and variable costs by the number of total units produced (total output).Total costs include variable costs, which vary according to the quantity of a good produced and include inputs such as labor and raw materials, and fixed costs, which are independent of the quantity of a good produced and include inputs (capital) that cannot be varied in the short term, such as buildings and machinery.Fixed costs and variable costs comprise total costĮxample of variable costs: material for producing clothes.Variable costs differ from fixed costs such as rent, advertising, insurance and office supplies, which tend to remain the same regardless of production output.Variable costs are those costs that vary depending on a company's production volume they rise as production increases and fall as production decreases.A corporate expense that varies with production output.It is one of the two components of the total costs of a good or service, along with variable costsĮxample of fixed costs: costs of building contruction.Fixed costs are expenses that have to be paid by a company, independent of any business activity.A costs that do not change with an increase or decrease in the amount of goods or services produced.The equilibrium market price is where the hypothetical supply and demand curves intersect.Market equilibrium is the point where supply equals demand for a product.Optimal weather circumstances (for agriculture).
Increase of number of producers in the market. What are „other factors” which can increase supply? The law of supply says that as the price of an item goes up, suppliers will attempt to maximize their profits by increasing the quantity offered for sale. A microeconomic law that states, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa. Decrease in income if good is inferior good. Increase in income if good is normal good. What are „other factors” which can increase demand? When consumers have less wealth, they may forgo using their own forms of private transportation in order to cut down costs (car insurance, gas and other car upkeep costs) and instead opt to use a less expensive form of transportation (bus pass)Įxample of inferior goods: public transport. An example of an inferior good is public transportation. Inferior goods can be viewed as anything a consumer would demand less of if they had a higher level of real income. A normal good is one that experiences an increase in demand as the real income of an individual or economy increases. An economic term used to describe the quantity demanded for a particular good or service as a result of a change in the given level of income. Also, good tends to have more value when paired with a complement than it does by itselfĮxample of complementary goods: printers and ink cartridges. Usually, the complementary good has little to no value when consumed alone but, when combined with another good or service, it adds to the overall value of the offering. A good or service that is used in conjunction with another good or service. A substitute can be perfect or imperfect depending on whether the substitute completely or partially satisfies the consumerĮxample of substitute goods: limonade and juice. 
A product or service that satisfies the need of a consumer that another product or service fulfills.
The law of demand says that the higher the price, the lower the quantity demanded, because consumers’ opportunity cost to acquire that good or service increases, and they must make more tradeoffs to acquire the more expensive product. A microeconomic law that states, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa. Administration of starting-up your businessīasics of Market Economy Demand, Supply, Market equilibrium, Costs, Microeconomic laws. Andrius Juskys, Vilnius University International Business School Garri Raagmaa, Center For Adult Learning IRBIS KONSULTATSIOONID LLC Dr.iur. Vera Boronenko, Daugavpils University Dr.geogr. #Setting up officer 365 for business using own domain how to#
HOW TO START YOUR OWN BUSINESS Educational module for adults without special economic educationĭr.oec.
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