CAS EC 101 Lecture Notes - Lecture 6: Demand Curve

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25 Sep 2017

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To a (cid:272)han(cid:311)e in one o(cid:310) its dete(cid:409)minants. Ho(cid:462) mu(cid:272)h (cid:408)uantit(cid:468) (cid:272)han(cid:311)es (cid:462)hen the(cid:409)e"s a (cid:272)han(cid:311)e in p(cid:409)i(cid:272)e in te(cid:409)ms o(cid:310) pe(cid:409)(cid:272)enta(cid:311)es. I(cid:310) somethin(cid:311) is elasti(cid:272), it is (cid:409)esponsi(cid:461)e. Inelasti(cid:272) demand: (cid:408)uantit(cid:468) demanded (cid:409)esponds a little (cid:271)it to (cid:272)han(cid:311)es in p(cid:409)i(cid:272)e. Goods (cid:462)ith (cid:272)lose su(cid:271)stitutes: more elasti(cid:272) demand. Fo(cid:409) e(cid:467)ample: i(cid:310) the ma(cid:409)ket is onl(cid:468) ben and (e(cid:409)(cid:409)(cid:468)"s i(cid:272)e (cid:272)(cid:409)eam, the(cid:409)e a(cid:409)e plent(cid:468) o(cid:310) su(cid:271)stitutes (cid:614)i(cid:272)e (cid:272)(cid:409)eam (cid:310)la(cid:461)o(cid:409)s(cid:615), demand is (cid:461)e(cid:409)(cid:468) elasti(cid:272) I(cid:310) the ma(cid:409)ket is i(cid:272)e (cid:272)(cid:409)eam, it is less elasti(cid:272) (cid:271)e(cid:272)ause i(cid:272)e (cid:272)(cid:409)eam doesn"t ha(cid:461)e man(cid:468) di(cid:409)e(cid:272)t su(cid:271)stitutes. The lon(cid:311)e(cid:409) the pe(cid:409)iod o(cid:310) time, the mo(cid:409)e elasti(cid:272) demand. P(cid:409)i(cid:272)e elasti(cid:272)it(cid:468) ans(cid:462)e(cid:409) is greater than (cid:528) P(cid:409)i(cid:272)e elasti(cid:272)it(cid:468) ans(cid:462)e(cid:409) is less than (cid:528) The(cid:409)e is a di(cid:409)e(cid:272)t (cid:409)elationship (cid:271)et(cid:462)een (cid:409)e(cid:461)enue and elasti(cid:272)it(cid:468) Points (cid:462)ith lo(cid:462) p(cid:409)i(cid:272)e and hi(cid:311)h (cid:408)uantit(cid:468) Points (cid:462)ith hi(cid:311)h p(cid:409)i(cid:272)e and lo(cid:462) (cid:408)uantit(cid:468) Ho(cid:462) mu(cid:272)h the (cid:408)uantit(cid:468) demanded o(cid:310) a (cid:311)ood (cid:409)esponds to a (cid:272)han(cid:311)e in.

Related Questions

interval (or arc) elasticity

cross-price elasticity

price elasticity of demand

elastic demand

income elasticity

inelastic demand

inframarginal units

marginal revenue

point elasticity

price effect

quantity effect

total revenue

unitary elastic demand

1. __________________ A measure of consumersâ sensitivity or responsiveness to changes in the price of a good or service.

2. ___________________ When the percentage change in price (in absolute value) is more than the percentage change in quantity demanded (in absolute value).

3. ___________________ When the percentage change in quantity demanded (in absolute value) is more than the percentage change in price (in absolute value).

4. ___________________ When the percentage change in quantity demanded (in absolute value) is just equal to the percentage change in price (in absolute value).

5. ___________________ Total amount paid to a producer for a good or service P * Q.

6. ___________________ The effect on total revenue of a change in price, holding quantity constant.

7. ___________________ The effect on total revenue of a change in quantity, holding price constant.

8. ___________________ An elasticity calculated over an interval of a demand curve or demand schedule.

9. ___________________ Elasticity at a specific price or point on a demand curve.

10. ___________________ A measure of how responsive quantity demanded is to a change in income, all other things constant.

11. ___________________ A measure showing how responsive the quantity demanded of one good is to changes in the price of another good, other factors constant.

12. ___________________ The additional revenue received by producing and selling one more unit of output.

13. ___________________ Units of output that could have been sold at a higher price had the firm not lowered its price to sell additional (marginal) units.

coffeehornet269

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

The table below indicates the demand and supply schedules for oil in the United States.

Price in dollars Quantity Demanded Quantity Supplied

14 16 4

16 15 6

18 14 8

20 13 10

22 12 12

Compute the arc price elasticity of demand for a price change from $18 to $20. Is the demand elastic or inelastic?

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CAS EC 101 Lecture Notes - Lecture 6: Demand Curve

CAS EC 101 Full Course Notes

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