CCT319H5 Study Guide - Midterm Guide: Etsy, Predatory Pricing, Ceteris Paribus
14 Feb 2017
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Price elasticity of supply changes over 3 production periods: > supply is perfectly inelastic in the immediate run (cid:894)= right (cid:374)o(cid:449); you (cid:272)a(cid:374)"t (cid:448)ary i(cid:374)puts instantly) > supply is either elastic or inelastic in the short run (can vary at least 1 input bc you have enough time) > supply is perfectly elastic for a constant-cost industry is very elastic for an increasing- cost industry in the long run (you have enough time to vary any resources) 3 main sectors in the economy: primary sector. Consists of industries that extract/cultivate natural resources (raw materials) Ex. extracting oil; farming: secondary sector. Consists of industries that fabricate processed goods. = making a given quantity of output with the least costly combination of inputs; it is what guides the ceo, they operate in self-interest. Businesses can choose from different production processes: > labour intensive: process employs more labour and less capital. > capital intensive: process employs more capital and less labour.
