Economics and Finance Basics

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Budget

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A detailed plan outlining expected income and expenses over a given period of time.

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Gross Income

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Income for a pay period before any deductions like taxes; monthly gross income can be calculated by annual salary/12 OR total hours worked per month x hourly wage.

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Net Income

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“Take home pay”; money earned from a job AFTER taxes and other deductions are taken out.

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Demand curve

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The graphic representation of the quantity of a good or service that buyers are willing and able to buy at all possible prices during a certain time period.

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Supply curve

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The graphic representation of the quantity of a good or service that producers are willing and able to sell at all possible prices during a certain time period.

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Equilibrium price

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The price at which quantity supplied and quantity demanded are equal.

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Equilibrium quantity

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The quantity of a good or service supplied and demanded at the equilibrium price.

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Law of Demand

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As price decreases, the quantity demanded increases. As price increases, the quantity demanded decreases.

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Revenue

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Money received; income for a business.

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Profit

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The amount of revenue that remains after a business pays the costs of producing a good or service.