ECO105Y1 Chapter Notes - Chapter 2: Marginal Utility, Rolex

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champagnegerbil876

23 Nov 2012

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Chapter 2: making smart choices (the law of demand) 2. 1- describe what determines you willingness to pay for a product/service. 2. 2-identify what smart choices depend on marginal benefit, not total benefit, and explain what changes marginal benefit. 2. 3-describe the relationship between price and quantity demanded, and identify the role of substitutes. 2. 4-explain the difference between a change in quantity demanded and a change in demand, and distinguish five factors that change demand. 2. 5-define elasticity of demand and explain how it determines business pricing strategies. What determined your choice between buying and downloading: you have just started at a college that is a 30-minute drive from home or a. It is a hot, sunny, crowded day, and you are selling a few collapsible umbrellas as sun parasols. The skies suddenly darken, rain begins to pour, and your buddy quickly changes the umbrella price sign to . Explain your thinking; include your analysis of the customer"s decision.

Related Questions

Many factors determine the supply and demand for labour. Identify and explain two factors that would increase or decrease the demand for labour. Identify and explain two factors that would increase or decrease the supply of labour. Your answer should include a discussion on marginal revenue product. I believe it would be difficult to answer this question correctly without referring to that topic. One way to approach this question would be:

1. Define marginal revenue product, and then discuss how this can change. Then relate this to the change in demand for labour.

2. Explain the determinant of labour supply. Explain what might change one of these determinants.

When answering this question would be a good time to review the difference between a change in quantity demanded and a change in demand and the difference between a change in quantity supplied and a change in supply. Remember, wage rates[theprice to rent labour] will not affect either the supply or the demand for labour!

amaranthdog776

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

Consumer surplus is the difference between the

Market price and the minimum price required to induce production

The maximum willingness to pay of consumers and the market price

Quantity demanded and the quantity supplied at the market price

Full economic price and the minimum price required to induce production

Show your work!

8.a) What is scarcity? Can it be eliminated? Explain

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b)Why does scarcity exist? How can it be resolved? Explain

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c) IS there such a thing as a free lunch? Yes No. Explain

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What is market equilibrium? Does the market always achieve equilibrium? If so, why? If not, why? Explain. Illustrate with examples and graphs where necessary

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

The movement along a given demand curve is the same as a shift in the demand curve.

True False. Explain

If the income elasticity for designer jeans is 1.5, a 10% increase in income will lead to a

15% rise in demand for designer jeans.

0.15% drop in the demand for designer jeans.

0.15% rise in demand for designer jeans.

Show your work

12. Which of the following increases the potential for sustainable long-run industry profits?

Entry.

The availability of multiple substitutes.

Absence of complements.

13. If firms in the pizza industry are earning negative economic profits, which of the following will most likely occur in the future?

Some firms will exit the market.

The economic profits of the firms in the industry will rise.

The market price for pizza will rise.

All of the responses are correct.

Explain your choice

14. You are the manager of a popular hand bag company. You know that the advertising elasticity of demand for your product is 2.5. How much will you have to increase spending on advertising in order to increase demand by 4%?

a. 0.16%.

1.6%.

2%.

10%.

Show your work

15. a) What is meant by price elasticity of demand. List and explain three factors of price elasticity of demand.

b) Why are managers interested in the concept of consumer surplus?

ECO105Y1 Chapter Notes - Chapter 2: Marginal Utility, Rolex

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