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ECON 110 Lecture Notes - Lecture 3: Demand Curve

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azuregerbil16
4 Oct 2015
School
Queen's University
Department
Economics
Course
ECON 110
Professor
Ian James Cromb

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ECON 110 Full Course Notes
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Document Summary

Econ 111 lecture 3 and 4 reading (ch 4,5) Demand is elastic when quantity demanded is quite responsive to changes in price. The reduction in supply pushes up the price but because the quantity demanded is quite responsive, only a small change in price is necessary to restore equilibrium. Demand is inelastic when quantity demanded is relatively unresponsive to price. Decrease in supply at the original price causes a shortage that increases the price. The quantity demanded does not fall much in response to the price. The equilibrium raises more, and equilibrium of quantity falls less. Elastic the demand curve does not move (flatter slope) quantity falls a lot, price goes up a bit. Inelastic the demand curves tilts (steep slope) quantity falls a bit, price goes up a lot.

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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 consumers’ 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.

4) a. Assume that the demand for plastic surgery is price inelastic. Are the following Statements true or false? Explain. (5 marks) 1. When the price of plastic surgery increase, the number of operations decreases. 2. The percentage change in the price of plastic surgery is less than the percentage change in quantity demanded. 3. Changes in price of plastic surgery do not affect the number of operations 4. Quantity demanded is quite responsive to changes in price. 5. If more plastic surgery is performed, expenditures on plastic surgery will decrease.

Assume that the demand for cosmetic or plastic surgery is price inelastic. Are the following statements true or false? Explain.

a. When the price of plastic surgery increases, the number of operations decreases.

b. The percentage change in the price of plastic surgery is less than the percentage change in quantity demanded.

c. Changes in the price of plastic surgery do not affect the number of operations.

d. Quantity demanded is quite responsive to changes in price.

e. If more plastic surgery is performed, expenditures on plastic surgery will decrease.