ECO100Y1 Study Guide - Perfect Competition, Profit Maximization, List Of Bus Routes In Queens

194 views4 pages
Published on 30 Jul 2011
School
UTSG
Department
Economics
Course
ECO100Y1
Professor
Q1)The market for photocopiers is perfectly comp. A technological
breakthrough lowers the cost of photocopiers. If the demand for photocopiers
is inelastic, sales will:
Answer:c, quantity (output) rises and total revenue falls diagram #1, March
30, 2011
Note: Demand Curves
1.Change in quantity demanded vs change in demand
2.Substitutes vs. Complements
3.Normal vs inferior goods ( as income goes down, you use less)
Q2) a perfect comp industry is in short run equilib. Industry price and output
will increase under which one of the following conditions:
Answer:d, March 30, 2011 Q#2
Incidence of a sales tax
(who ultimately pays tax, the buyer or the seller?)
Assume tax to be paid by seller
(remember: incidence does not depend on whether paid by seller or by buyer)
Q3) a tax has been levied on a product. The more price-elastic the demand for
that product is:
Insight: use perfectly inelastic and perfectly elastic demand curves to analyze
problem.
Answer: D, the lower is the revenue that is raised by the tax. March 30, 2011
Q#3
Observations
Perfectly inelastic DD: Market price increases by amount of tax full
incidence falls on buyer.
Perfectly elastic DD: Market price does not increase full incidence falls on
seller
COSTS
Marginal Cost
Average Variable Cost
Average Fized Cost
Average TOTAL Cost
Q4) a firms mc is $30, ATC $50, and output is 800 units. Its total cost of
producing 801 units is probably:answer: D March 30, 2011 Q#4
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Document Summary

A technological breakthrough lowers the cost of photocopiers. If the demand for photocopiers is inelastic, sales will: Answer:c, quantity (output) rises and total revenue falls diagram #1, march. Note: demand curves: change in quantity demanded vs change in demand, substitutes vs. Complements: normal vs inferior goods ( as income goes down, you use less) Q2) a perfect comp industry is in short run equilib. Industry price and output will increase under which one of the following conditions: Incidence of a sales tax (who ultimately pays tax, the buyer or the seller?) Assume tax to be paid by seller (remember: incidence does not depend on whether paid by seller or by buyer) Q3) a tax has been levied on a product. The more price-elastic the demand for that product is: Insight: use perfectly inelastic and perfectly elastic demand curves to analyze problem. Answer: d, the lower is the revenue that is raised by the tax.

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