Economics 1021A/B Lecture Notes - Lecture 8: Marginal Utility, Economic Surplus, Economic Equilibrium

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Economics 1021A/B Lecture Notes - Lecture 7: Inferior Good, Normal Good, Economic Equilibrium

Economics 1021A/B Lecture Notes - Lecture 8: Marginal Utility, Economic Surplus, Economic Equilibrium

Economics 1021A/B Lecture Notes - Lecture 10: Price Ceiling, Economic Equilibrium, Opportunity Cost

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Lecture 8: chapter (cid:1008) (cid:894)con"t(cid:895) and chapter (cid:1009) Review: when price elasticity is greater than 1 = elastic, when price elasticity < 1 = inelastic, when price elasticity = 1 unit elastic. If the price falls and demand is elastic, total revenue increases. If demand is inelastic and the price falls, total revenue decreases. If two goods are complements, the price elasticity is negative. If income elasticity of demand is positive, we have a normal good. Price elasticity of supply: pes = % change in quantity supply/% change in price, elasticity is always the % of the average/midpoint. Example: price rises from to and quantity supply increases from 20 units to 50 units. What is the price elasticity of supply: pes = (30/35)/(20/50) = 2. 14. Just like the price elasticity of demand, when the price elasticity of supply > 1 it has elastic supply. If equal to 1, it would be unit elastic supply.

Related Questions

Ch. 6: Simple Pricing

a. define the Law of Demand?

b. Explain the distinction between a change in demand and a change in quantity demanded?

c. create a demand curve from a simple demand schedule in Table 6.2?

d. determine the calculated values in a table such as Table 6.4?

e. Can you apply your understanding of Chapter 4s marginal analysis to pricing decisions in a price-making (versus price-taking) firm?

f. Can you explain in words what Own Price Elasticity, Cross-Price Elasticity, and Income Elasticity mean?

g. Given specific values for Own-Price Elasticity of Demand, can you determine whether demand for the good is elastic, inelastic, or unit elastic?

h. Given specific values for Cross-Price Elasticity, can you determine whether the two goods are substitutes or complements?

i. Given specific values for Income Elasticity, can you determine whether the good is a normal or inferior good?

j. Can you calculate each of these elasticities, such as in the homework?

k. Identify relatively elastic and inelastic demand curves?

l. List factors that may affect demand elasticity.

m. Indicate whether total revenue will increase or decrease as a result of a price change, depending on the demand elasticity?

The textbook used for this assignment is Managerial Economics, Froeb Chapters.

rubylouse898

1. The concept of price elasticity of demand measures:

a. the slope of the demand curve.

b. the number of buyers in a market.

c. the extent to which the demand curve shifts as the result of a price decline.

d. the sensitiveness of quantities demanded to price changes.

2. When the percentage change in price is less than the resulting percentage change in quantity demanded:

a. demand is elastic.

b. demand is inelastic.

c. demand is unit elastic.

d. none of the above.

3. The elasticity of demand:

a. will be the same at each price-quantity combination on a stable demand curve.

b. tends to be elastic in high-price ranges and inelastic in low-price ranges.

c. tends to be inelastic in high-price ranges and elastic in low-price ranges.

d. is infinitely large for a perfectly inelastic demand curve.

4. Suppose that as the price of Y falls from $2.00 to $1.80 the quantity of Y demanded increases from 110 to 121. It can be concluded that the price elasticity of demand is: _______.

5. Total revenue rises as the price of a good increases if price elasticity of demand is:

a. unitary elastic

b. perfectly inelastic.

6. The demand for such products as salt, bread, and electricity tend to be:

a. relatively price elastic.

b. relatively price inelastic.

c. of unit price elasticity.

d. perfectly price elastic.

coffeeelephant81

*Please provide the answer but also explain what is inelastic, elastic,unitary elastic

*Please explain elasticity of demand values

*Please explain what is an inferior good, how to obtain the answer.

1) If the price of gasoline increases 10% and quantity demanded decreases by 5%, then the demand curve for gasoline is:

A) inelastic.

B) elastic.

C) unitary elastic.

D) a perfect substitutable good.

2) If a good has an elasticity of demand of 21, then we say the good is:

A) highly inelastic.

B) unitary elastic. C) not elastic.

D) highly elastic.

3) For inferior goods, when an individual's income decreases, quantity demanded for these goods increases.

A) True

B) False

Economics 1021A/B Lecture Notes - Lecture 8: Marginal Utility, Economic Surplus, Economic Equilibrium

Economics 1021A/B Lecture Notes - Lecture 7: Inferior Good, Normal Good, Economic Equilibrium

Economics 1021A/B Lecture Notes - Lecture 8: Marginal Utility, Economic Surplus, Economic Equilibrium

Economics 1021A/B Lecture Notes - Lecture 10: Price Ceiling, Economic Equilibrium, Opportunity Cost

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