🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeClass Notes1,200,000CA670,000

MGEA02H3 Lecture Notes - Lecture 6: Demand Curve, Negative Number, Normal Good

56 views3 pages
carminecicada4
18 Apr 2017
School
UTSC
Department
Economics for Management Studies
Course
MGEA02H3
Professor
John Parkinson

For unlimited access to Class Notes, a Class+ subscription is required.

wanyiwu and 39094 others unlocked
MGEA02H3 Full Course Notes
38
MGEA02H3 Full Course Notes
Verified Note
38 documents

Document Summary

Price elasticity of demand: ratio of the % change in qd to the % change in the price as we move along demand curve. (given demand downward sloping, look at absolute value). % change in price: % change in qd = __change in qd__ *100. 2) % change in price = __change in price_ *100. **rise in price (positive % change in price) = negative % change in qd. Fall in price (negative % change in price) = positive % change in qd. Midpoint method: both % change in price/qd found this way. % change in x = __change in x__ *100. Avg value of x = __starting value of x. Perfectly inelastic: when qd non-responsive to changes in price, straight vertical line. Perfectly elastic: when any price increase will cause qd to drop to 0, straight horizontal line. **important bc predicts how changes in price affects total revenue from sales.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

MGEA02H3 Lecture Notes - Lecture 7: Negative Number, Inferior Good, Ceteris Paribus
crimsonraccoon916
MGEA02H3
Final Exam
Study Guide
MGEA02H3 Study Guide - Quiz Guide: Price Elasticity Of Demand, Demand Curve, Economic Equilibrium
erinalligator902
MGEA02H3
Final Exam
Study Guide
MGEA02H3 Study Guide - Price Ceiling, Junkers J 1, Demand Curve
carminemammoth173

Related Questions

. When the percentage change in quantity demanded is larger thanthe percentage change in price, demand is said to be:
A) price inelastic.
B) unit price elastic.
C) price elastic.
D) perfectly inelastic.

38. If the price elasticity of demand is found to be -3/4, thendemand is:
A) price inelastic.
B) price elastic.
C) unit price elastic.
D) positively sloped.


39. If the price elasticity of demand is found to be -6, thendemand is:
A) price inelastic.
B) price elastic.
C) unit price elastic.
D) horizontal.

40. If the price of a good is increased by 15 percent and thequantity demanded falls by 20 percent, the price elasticity ofdemand is:
A) price elastic.
B) price inelastic.
C) unit price elastic.
D) normal.

41. If the absolute value of price elasticity is greater than 1,this means the demand curve in that region is:
A) price elastic.
B) price inelastic.
C) unit price elastic.
D) upward sloping

Question 1

  1. If economic profits are zero

    accounting profits is less than the cost of capital.

    accounting profit is just covering the cost of capital.

    the cost of capital is negative.

    the entrepreneur should go to his/her next best alternative.

3 points

Question 2

  1. Markets provide

    information.

    prices.

    incentives.

    all of these choices.

3 points

Question 3

  1. The entrepreneur is always searching for

    positive profit.

    normal profit.

    accounting profit.

    economic profit.

3 points

Question 4

  1. Social regulations can create

    a more competitive market place.

    network externalities.

    a lower HHI.

    barriers to entry.

3 points

Question 5

  1. According to economic theory, profits are maximized where

    total revenue equals total cost.

    marginal revenue equals marginal cost.

    price and average cost are equal.

    where marginal product and average cost are equal.

3 points

Question 6

  1. Brand names help

    create commodities.

    maintain market power.

    create competition.

    keep economic profits at zero.

3 points

Question 7

  1. Entry of new firms causes

    accounting profits to go to zero.

    market share to grown.

    economic profits to go to zero.

    total revenue to be maximized.

3 points

Question 8

  1. Fixed costs

    do not vary with output

    vary with output

    do not vary with price

    vary with price

3 points

Question 9

  1. Variable costs

    do not vary with price.

    do not vary with output.

    vary with price.

    vary with output.

3 points

Question 10

  1. Value maximization means

    that managers make decision so as to increase the long-run market value of the financial claims on the firm.

    that a firm should make products that have the highest price.

    that managers make decision so as to increase the short-run market value of the financial claims on the firm.

    all of these choices.

3 points

Question 11

  1. A manager can determine if her product is viewed as a normal good or an inferior good by considering

    price elasticity.

    cross elasticity.

    income elasticity.

    advertising elasticity.

3 points

Question 12

  1. If demand is perfectly elastic,

    the smallest increase in price will cause quantity demanded to fall to zero.

    the smallest increase in price will cause demand to fall to zero.

    the smallest increase in price will cause quantity demanded to fall.

    the smallest increase in price will cause demand to fall.

3 points

Question 13

  1. If demand is perfectly elastic, then

    demand and price are inversely related.

    quantity demanded and price are inversely related.

    the demand curve is a vertical line.

    the demand curve is a horizontal line.

3 points

Question 14

  1. If price elasticity is 3.25 then

    for every one percent change in price, there will be a 3.25 percent change in quantity demanded.

    for every one percent change in price, there will be a 3.25 percent change in demand.

    for every one percent change in price, there will be a 32.5 percent change in quantity demanded.

    for every one percent change in price, there will be a .0325 percent change in quantity demanded.

3 points

Question 15

  1. If price elasticity is 3.25, then demand is

    inelastic.

    elastic.

    unitary.

    negative.

Question 16

  1. If price is cut and demand is elastic, total revenue will rise because

    the change in quantity demanded is greater than the percent change in price.

    the percent change in quantity demanded is greater than the change in price.

    the percent change in quantity demanded is greater than the percent change in price.

    customers can't find substitutes.

3 points

Question 17

  1. If price is cut and demand is inelastic, total revenue will fall because

    the change in quantity demanded is less than the percent change in price.

    the percent change in quantity demanded is less than the change in price.

    the percent change in quantity demanded is less than the percent change in price.

    customers can find substitutes.

3 points

Question 18

  1. If something is addictive, then

    price and demand are inversely related.

    price elasticity of demand is equal to one.

    demand is perfectly inelastic.

    demand is perfectly elastic.

3 points

Question 19

  1. In general, elasticities measure

    the change in quantity demanded when a product attribute changes.

    the change in consumer spending when income changes.

    the change in an attribute for a percentage change in price.

    the percentage change in the quantity demanded resulting from a fixed percentage change in some attribute.

3 points

Question 20

  1. Average total costs are defined as

    total costs divided by the change in output.

    total costs divided by output.

    the change in total costs when output changes.

    average variable costs plus marginal costs.

3 points

Question 21

  1. If a firm is experiencing economies of scale, then the long-run average cost curve is

    falling.

    rising.

    horizontal.

    shifting.

3 points

Question 22

  1. If average total cost is rising

    marginal cost is above average total cost.

    marginal cost is rising.

    marginal product is rising.

    marginal cost is above average total cost and is falling.

3 points

Question 23

  1. The period of time over which all inputs are variable is the

    market horizon.

    short run.

    calendar year.

    long run.

3 points

Question 24

  1. The supply chain refers to

    the supply curve.

    the process of outsourcing.

    the process of downsizing.

    the process of creating and selling a product.

3 points

Question 25

  1. When the capital (a fixed input) changes

    short-run marginal costs rise.

    short-run average total costs fall but do not shift.

    labor inputs decline.

    the short-run average total cost curve shifts.

3 points

Question 26

  1. A market of price takers is called

    perfectly competitive.

    monopolistically competitive.

    a monopoly.

    an oligopoly.

3 points

Question 27

  1. A market with a single seller is called

    perfectly competitive.

    monopolistically competitive.

    a monopoly.

    an oligopoly.

3 points

Question 28

  1. A market that mainly stresses product differentiation is called

    perfectly competitive.

    monopolistically competitive.

    a monopoly.

    an oligopoly.

3 points

Question 29

  1. Entry into a competitive market will continue until

    economic profits are zero.

    normal profits are zero.

    when accounting losses are zero.

    a. and b. are true

3 points

Question 30

  1. Firms in an oligopoly

    act independently.

    engage in strategic behavior.

    have perfect knowledge of the behavior of others.

    openly collude.