Module 7: Additional Resources

Glossary

  • Consumer surplus: the unpaid value of purchases to consumers as measured by the area under the demand and above price.
  • Cross-price elasticity: where a percentage change in the price of product A causes a percentage change in the quantity of product B.
  • Elasticity: the percentage change in quantity brought about by a percentage change in price.
  • Income elasticity: the percentage change in quantity given a percentage change in income.
  • Marginal cost: the change in total cost given a change in quantity.
  • Marginal revenue: the change in total revenue given a change in quantity (equal price).
  • Market equilibrium: the point where marginal cost equals marginal revenue or supply equals demand. This point is stable if prices are allowed to fluctuate.
  • Price elasticity of demand: the percentage change in quantity demanded divided by the percentage change in a good’s own price.
  • Price elasticity of supply: the percentage change in quantity supplied divided by the percentage change in a good’s own price.
  • Primary good: a raw material.
  • Producer surplus: the value that accrues to the producer above the cost. It can be calculated as Total revenue minus total cost. It is known as profit or rent.
  • Rent: the normal profits accruing to a producer.
  • Secondary good: a partially finished good moving through the supply chain.
  • Supply chain: the sequence of processes involved in the production and distribution of a good.
  • Tertiary good: a final or finished good.
  • Total cost: the total cost of production (variable cost plus fixed cost).
  • Total revenue: price multiplied by quantity.
  • Total value: total revenue plus consumer surplus.
  • Value added: the financial value associated with a product as it is processed and becomes more finished, and therefore more valuable to the final user.
  • Willingness to pay: the amount a consumer is willing to pay for a product. Sometimes the demand curve is referred to as willingness to pay curve.
  • Unitary elastic: the point on a curve where a 1% change in price results in a 1% change in quantity supplied or demanded thereby having zero effect on a change in revenue.

References

Parnel, E. (2016). Organic food: Protects your body, not your portfolio. Seeking Alpha. Retrieved from: http://seekingalpha.com/article/3896266-organic-food-protects-body-portfolio

Wozniacka, G. (2013, January 12). With almonds’ rising revenues, land values soar. U.S. News. Retrieved from: http://www.usnews.com/news/us/articles/2013/01/12/with-almonds-rising-revenues-land-values-soar