23115 Study Guide - Excludability, Externality, Aggregate Demand
Document Summary
Economics for business notes: demand schedule: a table showing the relationship between the price of a good and the quantity, demand curve: a graph showing relationship between the price of a good and the quantity demanded. demanded. Normal goods (less than 1) e. g. food: negative income elasticity (less than 0) (greater than 1) e. g. expensive cars. Percentage change in quantity demanded good of of. The burden of a tax falls more heavily on the side of the market that is less elastic (when the good is taxed, the side of the market with fewer good alternatives cannot easily leave the market and must, therefore, bear most of the burden of tax. (a) elastic supply, inelastic demand that is, sellers are very responsive to the price of the good, whereas buyers are not very responsive. Thus, the price received by sellers does not fall much, so sellers bear only a small burden. In contrast, the price paid by sellers falls substantially.
