ECON1101 Chapter Notes - Chapter 8: Time Horizon, Fixed Cost, Giffen Good
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ECON1101
● Availability of Raw Material: Large availability = elastic supply and vice
versa
● Factors mobility: the more mobile factors of production are, the higher the
elasticity
● Inventories/excess capacity: the larger amount of inventories, the higher
the elasticity
● Time horizon: Time horizon is the length of time in which a producer has
to respond to a change in price. A longer time horizon leads to a higher
elasticity because they can search for more efficient inputs and revise
production plans
Special Note
● In the example above, the first total cost of $10 for 0 quantity is a fixed cost
○ This is how we can easily identify the fixed cost if it is not given
Chapter 3: Demand in Perfectly Competitive Markets
●Utility: This denotes the satisfaction that an individual derives from
consuming a given good or taking a certain action. It is measured in utils
per unit of time
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