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Final

GMS 200 Study Guide - Final Guide: Demand Curve, Indifference Curve, Invisible Hand


Department
Global Management Studies
Course Code
GMS 200
Professor
Margaret Buckby
Study Guide
Final

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1. Explain the factors which shift the supply curve
o Availability of resources (+)
o Cost of resources (-)
o Technology (+)
o Weather (+)
o # of sellers (+)
o Expected future price: if future price increase, current SS decreases
o Taxes (-)
2. Describe the main features of a pure market economy
o Private ownership of research
o Freedom of choice
o Freedom of occupation
o Freedom of enterprise
o Guided by self-interest
o Customer maximum satisfaction
o Producer maximum profit
o Government follows Laissez-faire
o Invisible hand
3. Describe the factors which make the demand for a product relatively elastic?
Factors
e > 1
e < 1
Type of product
Luxury
Necessities
Freq of Use
Occasionally
Habit
# of substitutes
Many
Few
Proportion of Income
Big Ticket
Small ticket items
Time
More
Less
4. Explain graphically how indifference analysis can be used to derive a demand curve
5. Show with the help of relevant graphs, how the following would affect the EP and EQ of a small
automobiles if
a. The price of large automobiles rises

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b. There is a decline in the number of firms making them
6. Compare the “offer to purchase” and the “deficiency payment” method of agricultural support,
with the help of relevant graphs.
7. Explain the factors which shift the demand curve

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1. Graphically, show all the possible equilibrium positions for a PC firm in the short run, using the
MR=MC approach. Highlight the supply curve
2. List the ‘economies’ and diseconomies’ of scale and how they determine the LAC with the help
of a graph
3. Using relevant graphs, show how a PC firm reaches long run equilibrium
4. Show graphically, how governments regulate a monopoly.
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