demand curve - graph that relates the quantity sold and price, showing the maximum number of units
that will be sold at a given price
consumer tastes - depends on demographics, culture, and technology
-can change quickly
price and availability of similar products - price falls, more people buys
, -price of substitute falls or availability increases, demand for normal food falls
consumer income - consumers income increase, demand for a product will also increase
demand factors - factors that determine consumers willingness and ability to pay for products and
services
price elasticity of demand - = percentage change in quantity demanded/ percentage change in price
elastic demand - 1% decrease in price produces more than 1% increase in quantity demanded, thereby
increasing total revenue
inelastic demand - 1% decrease in price produces less than a 1% increase in quantity demanded, thereby
decreasing total revenue.
total revenue - total money recieved from the sale of a product
=P (price) x Q (quantity sold)
4 cost concepts - total cost, fixed cost, variable cost, and unit variable cost
break-even analysis - analyzes the relationship between total revenue and total cost to determine
profitability at various levels of output
break even point (BEP) - quantity at which total revenue and total cost are equal
= Fixed cost/ unit price -unit variable cost
break even chart - depicts graphic presentation of the break-even analysis
demand-oriented approach - weigh factors underlying expected customer tastes and preferences more
heavily than such factors such as cost, profit, and competition when selecting a price level
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