MGEA01H3 Lecture Notes - Lecture 6: Marginal Revenue, Normal Good, Inferior Good

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ambermanatee418

30 Nov 2011

School

UTSC

Department

Economics for Management Studies

Course

MGEA01H3

Professor

Kieran Furlong

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MGEA01H3 Full Course Notes

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Document Summary

Elatic- the percentage change in quantity is greater then the percentage change in price. Point elasticity is only accurate for one small point change. He does not care whether the answer is positive or negative. Elastic- price went down, total revenue went up. Tc=fixed cost+ cost of every unit (variable cost) No monopoly every produces in the inelastic portion of a demand function. They are not subject to the market price increases because they are price setters. Every linear demand function- tr is in the middle. Marginal revenue is zero at the mid point. Point elasticity is not accurate over a range. http://www. google. ca/search? client=safari&rls=en&q=monopoly+producing+in+the+inelastic&ie=u. Percentage change of quantity demand relative to the percentage in income. Cost has no effect on price, what people are willing to pay only affects price. Minimum wage: firms higher less people, they are replaced by higher skilled people. Price goes up, inelastic, total revenue goes up.

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

burgundywombat357

interval (or arc) elasticity

cross-price elasticity

price elasticity of demand

elastic demand

income elasticity

inelastic demand

inframarginal units

marginal revenue

point elasticity

price effect

quantity effect

total revenue

unitary elastic demand

1. __________________ A measure of consumersâ sensitivity or responsiveness to changes in the price of a good or service.

2. ___________________ When the percentage change in price (in absolute value) is more than the percentage change in quantity demanded (in absolute value).

3. ___________________ When the percentage change in quantity demanded (in absolute value) is more than the percentage change in price (in absolute value).

4. ___________________ When the percentage change in quantity demanded (in absolute value) is just equal to the percentage change in price (in absolute value).

5. ___________________ Total amount paid to a producer for a good or service P * Q.

6. ___________________ The effect on total revenue of a change in price, holding quantity constant.

7. ___________________ The effect on total revenue of a change in quantity, holding price constant.

8. ___________________ An elasticity calculated over an interval of a demand curve or demand schedule.

9. ___________________ Elasticity at a specific price or point on a demand curve.

10. ___________________ A measure of how responsive quantity demanded is to a change in income, all other things constant.

11. ___________________ A measure showing how responsive the quantity demanded of one good is to changes in the price of another good, other factors constant.

12. ___________________ The additional revenue received by producing and selling one more unit of output.

13. ___________________ Units of output that could have been sold at a higher price had the firm not lowered its price to sell additional (marginal) units.