ECO 1102 Study Guide - Externality, Demand Curve, Oligopoly

• School: University of Ottawa
• Department: Economics
• Course: ECO 1102
• Professor: All

Document Summary

Economists classify supply curves according to their price-elasticity: the slope of the supply curve is closely related to the inverse of the price- elasticity of supply, rule of thumb: the larger the elasticity, the flatter the curve. The smaller the elasticity, the steeper the curve. Determinants of elasticity of supply: ability of sellers to change the amount of the good they produce. Books, cars, or manufactured goods are elastic: time period. Supply is more elastic in the long run. The methodology used to analyze changes in equilibrium. Examine whether the supply or demand curve shifts: determine the direction of the shift of the curve, use the supply-and-demand diagram to see how the market equilibrium. Income elasticity of demand properties: goods consumers regard as necessities tend to be income inelastic examples include food, fuel, clothing, utilities, and medical services, goods consumers regard as luxuries tend to be income elastic.