BUSI 2210 Chapter Notes - Chapter 12: Contribution Margin, Variable Cost, Resale Price Maintenance
5 Feb 2017
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Demand: the quantity of a product that will be offered to the market by producers at various prices for a specific period of time. Supply: the quantity of a product sold in the market at various prices for a specific period of time. Price equilibrium: when demand and supply are equal. With elastic demand: consumer demand is sensitive to changes in price. With inelastic demand: an increase or decrease in price will not affect demand. Variable cost: a cost that varies with changes in level of production. Fixed cost: a cost that does not change with level of production. Break-even point: total costs equal total revenue, so no profit is earned. Mark up: a dollar amount added to the cost of a product by the seller. Unit contribution margin: the difference between the price per unit and the variable cost per unit. For the consumer, price is: the cost of paying for something.
