ECON-2110 Lecture Notes - Lecture 5: Marginal Cost, Economic Surplus, Cotton Gin

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6 Sep 2016

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Old model has limitations because it only represents one seller and one buyer need a market concept. Demand curve inverse demand curve, gives the relation between price and quantity of a good. This curve shows the value of a good/service to a customer. Law of demand when you raise the price of a good, consumers will buy less of it . Demand curve shows a mathematical function visually can be straight, curved, or kinked almost always sloped downwards. People respond to incentives : double the price of steak and the consumption of steak will drop, price of steak drops to a pound and consumers will buy more. Want goods to go to high value users price can control where goods go. On the demand curve moving from one point to another shows the change in the quantity demanded due to a change in price shifts along the curve.

Related Questions

The tragedy of the commons

leads to underutilized resources.

occurs when club goods are produced.

occurs when public goods are provided.

gives rise to a positive externality.

gives rise to a negative externality.

When people move to an area of the world that was previously unpopulated, we expect more consumers and more producers to spring up in that area. What would we expect to happen to the price and quantity in the markets where this happens?

The equilibrium price will be indeterminate and equilibrium quantity will go up.

The equilibrium price will be indeterminate and equilibrium quantity will go down.

The equilibrium price will go up and the equilibrium quantity will go up.

The equilibrium price will go down and equilibrium quantity will be indeterminate.

The equilibrium price will go up and equilibrium quantity will be indeterminate.

When Noelle received a promotion at work, her income rose by 50 percent. The income elasticity of demand for steak was found to be 1.5. For her, steak is a(n)

necessity.

luxury.

substitute for chicken.

complement to potatoes.

inferior good.

(1) If a demand curve shifts to the left, then:
a) price would go up and quantity would go down
b) price would go down and quantity would go up
c) a lower price and quantity would result
d) a higher price and quantity would result

(2) Demand and supply curves are drawn assuming ceterisparibus.This means that:
a) economists ignore all assumptions
b) economists don't watch for the fallacy of false cause
c) changes will be proportional
d) all other things besides price and quantity are unchanged

(3) If steak and potatoes are complements, when the price ofsteakgoes up, the demand curve for potatoes:
a) shifts to the right
b) shifts to the left
c) stays the same
d) shifts to the right and then moves back

(4) Given that chicken and beef are substitute goods, if thepriceof chicken decreases substantially, there would be:
a) an increase in the demand for beef
b) a decrease in the demand for beef
c) a decrease in the quantity for beef demanded
d) no change in the demand for beef

(5) Every day for the past two years you've had ham and cheese onawhole wheat bagel for lunch at Bungalow Bob's BagelBoutique.However, the price of whole wheat bagels has risen by 10cents sotoday you decide to have ham and cheese on rye bagel. Inthis case,whole wheat and rye bagels are best considered:

a) superior goods
b) normal goods
c) substitute goods
d) complementary goods

(6) For most goods, purchases tend to rise with increases inbuyers'incomes and to fall with decreases in buyers' incomes. Suchgoodsare known as:

a) inferior goods
b) direct goods
c) normal goods
d) luxury goods

(7) Economists know that a particular good can be classified asaninferior good if a(n)______ increase in buyers' incomecausesa(n)_____

a) increase; increase in demand
b) increase; increase in quantity demanded
c) increase; decrease in demand
d) decrease; decrease in demand

(8) An increase in the demand for medical services caused byanincrease in the number of people 65 is most likely attributabletowhich demand shifter?

a) income
b) consumer preferences
c) prices of other goods
d) demographic characteristics

(9) Which of the following would shift the demand curve fornewtextbooks to the right?

a) a decrease in the price of paper
b) a fall in the price of used textbooks
c) an increase in college enrollments
d) a fall in the price of new textbooks

(10) How a supply curve is sloped and located depends on:

a) technology
b) resources prices
c) the number of producers or sellers
d) all of the above

(11) A decrease in supply means:

a) a shift to the left of the entire supply curve
b) moving downward (to the left) along the supply curve withlowerprices
c) less will be demanded at every price
d) more will be supplied at every price

greycrocodile249

1. Managerial economics can best be defined as the:

Select one:

a. macroeconomics and microeconomics for managers.

b. analysis of the labor market through the behavior of workers and managers.

c. analysis of major management decisions using economic tools.

d. study of economic incentives on consumer behavior and demand.

e. study of the strategic interaction between firms in a market.

2. The price elasticity of demand is defined as the ratio of the _____ other factors held constant.

Select one:

a. change in the price of a good to the change in the total revenue

b. percentage change in quantity demanded to the percentage change in the price of a competitorâs good

c. percentage change in quantity demanded to the percentage change in price

d. percentage change in the price of an input to the percentage change in the price of the good

e. percentage change in price of the good to the percentage change in the consumersâ income

3. According to the law of demand, if a firm reduces the price of its good:

Select one:

a. the quantity of goods produced and sold by the firm will decline.

b. competing firms will reduce prices.

c. some consumers will exit the market.

d. consumers in the market will demand more units of the good.

e. consumers will demand fewer units than before the price cut.

4. Other factors constant, a change in _____ will cause a shift in a firm's demand curve.

Select one:

a. the quantity of the good offered for sale

b. the price of the good or service

c. the wages paid to labor employed

d. the general income level of consumers

e. the technology used in the production of the good or service

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ECON-2110 Lecture Notes - Lecture 5: Marginal Cost, Economic Surplus, Cotton Gin

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