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total revenue and elasticity.docx

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ECON 101
Wokia Kumase

Sept.25 Important Concepts for Midterm1 1.Exogenous/Endogenous Variables 2.Micro/Macro economics √ 3.Positive/Normative statements √ 4.Calculating Slopes √ 5.Relationship between Variables √ 6.Determining Opportunity cost √ 7.Relative/money price √ 8.Comparative/Absolute Advantage √ 9.Change in Demand/change in quantity demanded √ 10.Change in supply/change in Quantity Supplied √ 11.Factors cause shifts in demand/supply √ 12.Determining equilibrium from graph and algebraically √ 13.Price Elasticity of Demand Make sure to go through these concepts, >=80% Total revenue and elasticity Producers and economic individuals need to know the elasticity of the goods. Factors that influence the elasticity of demand ① Closeness of substitutes The closer the substitutes for a good or services, the more elastic are the demand for the good and service. ② Nature of the good Necessities: inelastic demand(generally) Luxuries: elastic demand(generally) ③ Proportion of income spent on the good If you spend a large proportion of your income on a good or a service, then the larger is the elasticity of demand for that good or service. But maybe in deloped countries, the expenditure of food accounts for a small proportion in their income. In some developing countries, the expenditure of food accounts for a large proportion in their
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