🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeStudy Guides420,000US230,000

ECON 1115 Study Guide - Midterm Guide: Perfect Competition, Opportunity Cost, Determinative

95 views2 pages
School
Northeastern University
Department
Economics
Course
ECON 1115
Professor
All

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Many sellers, so many that if one is gone nothing changes: easy exit, entry into this market is easy, homogeneous: good at hand is not a commodity; there are many alternatives. 20 multiple choice 3 points each 60 points. 4 free response worth 40 points total society"s ability to produce goods and services there is no such thing about free lunch : opportunity cost. Oil and carpets: 2 different individuals that produce 2 diff goods; analyze the relative relationships and marginal opp. 12 is about what happens at diff prices at markets:; assuming it is competitive. Short answer: normative versus positive, 8 pts. : series of true false about demand, market, cost of production, supply, epf: 12pt 3 parts; manipulate a market: product a graph of a market. Remember to label curves and axis"s: questions about changing determinants and what are the market outcomes, cross price elasticity/ markets. If greater than 1 then it is elastic.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers

Related Documents

ECON 1115 Lecture Notes - Equation, Complementary Good, Demand Curve
skyraven864
ECON 1115 Lecture Notes - Lecture 5: Economic Equilibrium, Shortage, Excess Supply
taupecockroach37
ECON 1115 Lecture Notes - Lecture 5: Demand Curve, Inferior Good, Normal Good
cerisegiraffe538

Related Questions

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 consumers’ 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.

From the scenario for Katrina’s Candies, examine the procedure Herb will use to estimate the "demand model" for this product and comment on the expected price elasticity, income elasticity, and cross price elasticity of demand. That is, do you expect demand to be price elastic or inelastic? Will the income elasticity suggest Katrina Candies is a luxury or a necessary good? And, is there likely to be a strong cross price elasticity with the other products that Herb included in his demand model? Explain your answers. What can you determine about consumer demand for a product whose estimated demand elasticities are as follows: Price Elasticity of demand is -0.85 Income Elasticity of demand is 2.5 Cross Price Elasticity of demand with this product and your product is -2 I would like you to think about this simple formula for predicting the change in total revenue when there is a given percentage change in price. Using the example above, if ED (price elasticity of demand) is -.85, then a 10% increase in price will cause the quantity demanded to fall by 8.5%, (-8.5% / 10% = -.85). The Formula for Predicting % Changes in Total Revenue is: %ΔTR = %ΔQ + %ΔP where TR = Total Revenue, Q is Quantity Demanded and P = price. Using this formula, what would be the % Δ in TR if ED is -.85 and the %ΔP is 10%?

6) 1This set of questions focus on elasticity.

a. John’s demand for bananas increases from 4 bananas to 6 bananas when his hourly wage rises from $18 to $30. What is his income elasticity of demand for bananas? Use the standard formula of percentage change to calculate this income elasticity. Are bananas normal or inferior goods for John?

b. John’s demand for bananas dropped from 10 bananas to 6 bananas when the price of apples decreased from $6 per apple to $5 per apple. What is his cross-price elasticity of bananas for apples? Use the arc elasticity formula for the percentage change to calculate this cross-price elasticity. Based upon your value for the cross-price elasticity of demand of bananas for apples, are these two goods substitutes or complements? Explain your answer.

c. Suppose at $4 per banana, Ben can supply an infinite quantity of bananas, but he will supply none at a price below $4. What do you know about his supply when price rises above $4? What is Ben’s price elasticity of supply?