Examlex
What is a price ceiling? What is a price floor? Give a real world example of each. What happens to the relationship between quantity demanded and the quantity supplied with an effective price ceiling? What happens to the relationship between quantity demanded and the quantity supplied with an effective price floor? What is likely to happen if there is a shortage of rent controlled apartments? What is likely to happen if there is a surplus of price supported grain?
Diminishing Returns
A principle stating that as more of a variable input is added to a fixed input, beyond some point, the additional output from the additional input will decrease.
Marginal Cost
The financial outlay required to create another unit of a good or service.
Average Total Cost
The total cost of production (fixed plus variable costs) divided by the number of goods produced, essentially the per unit production cost.
Average Variable Cost
The total variable costs (like materials and labor) divided by the quantity of output produced, indicating the cost of producing each unit.
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