ECON101 Chapter Notes - Chapter 4: Demand Curve, Negative Number, Inferior Good

22 views6 pages

cyanbat359

17 Feb 2016

School

University of Waterloo

Department

Economics

Course

ECON101

Professor

Robert Park

For unlimited access to Textbook Notes, a Class+ subscription is required.

purplechimpanzee495 and 51 others unlocked

ECON101 Full Course Notes

Verified Note

79 documents

Document Summary

Measure of degree of responsiveness in certain factors: income, price, supply. Difference lies in demand curve (slope: note: slope is not elasticity. Price elasticity of demand: units-free measure of the responsiveness of the quantity demanded of a good to a change in its price. . 50 a pizza and 9 pizza an hour are demanded. When price falls by /pizza, the quantity demanded increase by 2 pizzas/hour. % change in quantity demanded: % q= price change average price = quantity c hange averagequantity = = -4 interpretation: negative is indication of inverse relationship between price and quantity demanded, but we take it as an absolute value. =4 interpretation: a 1% decrease in price will lead to a 4% change in quantity demanded, good is elastic, greater change in quantity demanded when the price changes. Average price and quantity: the midpoint between original price and new price.

Related Questions

a) What is the advantage of using the price elasticity rather than the slope of the demand curve or its inverse to measure the responsiveness in the quantity demanded of a commodity to a change in its price?

b) Why and how is the formula for arc price elasticity of demand different from the formula for point price elasticity of demand?

lemonsea-lion739

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 consumersâ 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.

coffeehornet269

Ch. 6: Simple Pricing

a. define the Law of Demand?

b. Explain the distinction between a change in demand and a change in quantity demanded?

c. create a demand curve from a simple demand schedule in Table 6.2?

d. determine the calculated values in a table such as Table 6.4?

e. Can you apply your understanding of Chapter 4s marginal analysis to pricing decisions in a price-making (versus price-taking) firm?

f. Can you explain in words what Own Price Elasticity, Cross-Price Elasticity, and Income Elasticity mean?

g. Given specific values for Own-Price Elasticity of Demand, can you determine whether demand for the good is elastic, inelastic, or unit elastic?

h. Given specific values for Cross-Price Elasticity, can you determine whether the two goods are substitutes or complements?

i. Given specific values for Income Elasticity, can you determine whether the good is a normal or inferior good?

j. Can you calculate each of these elasticities, such as in the homework?

k. Identify relatively elastic and inelastic demand curves?

l. List factors that may affect demand elasticity.

m. Indicate whether total revenue will increase or decrease as a result of a price change, depending on the demand elasticity?

The textbook used for this assignment is Managerial Economics, Froeb Chapters.

rubylouse898

ECON101 Chapter Notes - Chapter 4: Demand Curve, Negative Number, Inferior Good

ECON101 Full Course Notes

Document Summary

Get access

Related Documents

ECON101 Study Guide - Final Guide: First Come, First Served, Marginal Cost, Marginal Revenue

Related Questions