ECON 20 Chapter Notes - Chapter 4: Price Elasticity Of Demand, Inferior Good, Dependent And Independent Variables

8 views2 pages

magentamuskrat366

12 May 2020

School

Irvine Valley College

Department

Economics

Course

ECON 20

Professor

Mcneil

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

Document Summary

Elasticity of demand with respect to a given variable is the coefficient of the variable multiplied by ratio of the variable to the quantity demanded. For a linear demand curve, the value of an elasticity depends on the price and quantity at which it is calculated. Own price elasticity is not the same as the slope of the demand curve. Demand is elastic in high prices and inelastic in low prices. For prices near zero, demand is inelastic. When prices rise, qx decreases and the absolute value of the elasticity increases. Example: own price elasticity of demand = -1. 15. Interpretation: if a company raises the price of good x, the percentage decline in the quantity demanded will be greater in absolute value than the % rise in price. Total revenues will fall if they raise shoe prices. Since it is positive, good y is a substitute for good x. Good x is an inferior good because it is negative.

Related Questions

budget line

marginal utility

complete property of preferences

market demand

consumption bundle

substitution effect

Giffen good

total effect

income effect

transitive property of preferences

indifference curves

utility

the marginal rate of substitution

utility function

1.	_____	The satisfaction or benefit that consumers receive from consuming goods or services.
2.	________________ _	A particular combination of specific quantities of goods or services
3.	________________ _	Consumers can rank all conceivable bundles of goods or services
4.	_____	If A is preferred to B, and B is preferred to C, then A is always preferred to C.
5.	_____	Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services.
6.	_____	A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility.
7.	_____	The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed.
8.	_____	The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant.
9.	_____	The line showing all bundles of goods that can be purchased at given prices if the entire income is spent.
10.	_____	The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes.
11.	_____	The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes.
12.	________________ _	The sum of the substitution and income effects.
13.	_____	A good for which quantity demanded varies directly with price, causing an upward sloping demand curve.
14.	_____	A list of prices and the corresponding quantity consumers are willing and able to purchase at each price.

blushwildebeest943

ECON 20 Chapter Notes - Chapter 4: Price Elasticity Of Demand, Inferior Good, Dependent And Independent Variables

Document Summary

Get access

Related Documents

ECON 20 Lecture Notes - Lecture 29: Marginal Revenue, Marginal Utility, Marginal Cost

ECON 20 Lecture Notes - Lecture 11: Microsoft Word, Marginal Revenue, Corel

ECON 20 Chapter Notes - Chapter 1: Cashew, Demand Curve

Related Questions