ECON101 Study Guide - Final Guide: First Come, First Served, Marginal Cost, Marginal Revenue
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ECON101 Full Course Notes
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Necessities like food and shelter perfectly elastic demand: quantity demanded changes by an infinitely large percentage in response to a tiny price change ex. Soft drinks elastic demand: elasticity is >1, for luxury items ex. Cars, furniture ex. price changes from to ; quantity increases from 0 to 20. Ceod = 20%/50% = 0. 4 ex. compliment price of drink from . 50 to . 50, change in quantity of pizza from 11 to 9. Fruits may have perfectly inelastic supply curve because crops were planted earlier that year. Obstacles to efficiency: price and quantity regulations, ex. National defence: monopoly sole provider of a good or service. Impediments to rational choices: bounded rationality uncertainty, listen to others, gut-instincts. Bounded will-power decisions we might later regret ex. Whatever the firm buys to start and run ex. Whatever the firm owns to start and run ex.