[ECON 102] - Final Exam Guide - Everything you need to know! (26 pages long)

• School: University of Illinois
• Department: Economics
• Course: ECON 102
• Professor: Isaac Dilianni--- Universityof Illinois

Document Summary

% change in the quantity / % change in the price = Van gogh is inelastic to price because the painter cannot paint anymore thus quantity change is zero: price elasticity of demand differs along a linear demand curve, income elasticity of demand: positive: normal good; negative: inferior good. Economies of scale diseconomies: optimal firm size (minimum efficient scale): the quantity of production that minimizes long run average total costs, the perfect competition model, two assumptions: Whichever is more inelastic (sleeper) bears a larger percentage of the burden of the transaction cost: intermediary (middleman): a person (or organization) who facilitates an exchange, two basic ways that intermediaries operate. They can help potential traders identify each other, and charge a fee for this service. A is growing flowers at his backyard for selling. His neighbors will have the benefit of a fresh air and smell of flowers.