Economics 1021A/B Lecture Notes - Lecture 4: Mechanical Engineering, Insulin, Economic Surplus

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24 Dec 2017

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ECON 1021A/B Full Course Notes

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Money price = dollar amount of a good for exchange, relative price= dollar amount of the opportunity cost, this is what we referee to when calculating the cost of something. Is the measure of the responsiveness of between the quantity demanded and a average percent change in price. It is its own unit: always positive, the slope of demand is a good indicator of elasticity. Price elasticity of demand = average percent change in quantity demanded. Insulin is an example of a good close to perfectly elastic. A normal good that has an equal change in price and quantity demanded. Quantity demanded in less the percent change in price. A tiny change in price will cause an infinite change in demand. Elastic demand: if a good is over 1. 00 it means percent change in quantity is more than the. Percent change in price: examples: metals, cars, mechanical engineering products, furniture.

Related Questions

The substitution effect of a price change refers to
A) the change in quantity demanded that results from a change in price making a good more
or less expensive relative to other goods that are substitutes.
B) the shift of a demand curve when the price of a substitute good changes.
C) the movement along the demand curve due to a change in purchasing power brought
about by the price change.
D) the shift in the demand curve due to a change in purchasing power brought about by the
price change.

burgundyferret557

When quantity demanded decreases in response to a change in price,

A. the demand curve shifts to the right.
B. the demand curve shifts to the left.
C. there is a movement down along the demand curve.
D. there is a movement up along the demand curve.
E. the supply curve shifts to the right.

The price elasticity of demand is the measure of the responsiveness of the demand for a good to a percentage change in the price of that same good. When the demand for a good changes due to an increase or decrease in the price of the good, it can be said that the good has a price elastic demand. On the other hand, a good whose demand is not significantly affected by a change in the price levels is price inelastic. For example, luxury goods are usually price elastic because these are not something that most people really need. Thus, when the price of luxury goods increases, the demand for such goods falls. Goods that fall within the latter category are usually the basic necessities such as food and prescription medicine. Even when these types of goods become pricier, most people would find ways to afford them because they need those items to survive.