Chapters 5 and 6 —Elasticity and Consumer Choice MULTIPLE CHOICE 202. A 15 percent increase in the price of beef reduces the quantity of beef consumed by 30 percent. Thus, the demand for beef is _______, and total consumer expenditure (or total firm revenue) will _______ as a result of the price increase. (Fill in the blanks.) a. elastic; increase * b. elastic; decrease c. inelastic; increase d. inelastic; decrease 203. Which of the following is true about
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PED Price Elasticity Demand When price Quantity demanded When price Quantity demanded We have to Study not the direction of the change but the degree of the change If the price Quantity demanded markedly : Elastic = High response If the price Quantity demanded not markedly ( Low response )
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"gross income" figure from which costs are subtracted to determine net income. Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold. Revenue is also known as "REVs." Marginal revenue From Wikipedia, the free encyclopedia Jump to: navigation, search Typical marginal revenue R' and average revenue (price) <R> curves for a firm that is not in perfect competition In microeconomics, marginal revenue (R') is the additional
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Equilibrium of supply and demand 7 Market clearing price 7 Elasticity, Revenue and Managerial Implications 7 Price elasticity of demand 8 Total Revenue 8 Elastic,inelastic,unitary perfect 8 Demand 8 Elasticity curve 8 Other elasticity measures 8 Income elasticity of demand Ei 8 Cross elasticity of demand Es 8 Price elasticity of supply Ec 8 Price Elasticity and the impact of taxation 8 Impact of Government Regulation: Price Ceiling, Price Floor and Taxes 8 Government regulation 8
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312 Midterm Exam - Latest Page 1 Question 1.1. (TCO 1) As a consequence of the condition of scarcity (Points : 3) there is never enough of anything. production has to be centrally planned. things which are plentiful have relatively high prices. individuals and communities have to make choices from among alternatives. Question 2.2. (TCO 1) The opportunity cost of constructing a new public highway is the (Points : 3) money cost of hiring contractors and construction workers for
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1. Using supply and demand and competitive analyses, explain what happens to a pharmaceutical company’s revenues and profits from an individual drug once it loses its patent protection. Then identify at least one strategy the company can use to mitigate the losses; be sure to support your suggestion using economic analysis. Pharmaceutical companies enjoy patent protection in the US and most other countries. The patent protection establishes a barrier between the company and competitors for a number
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TR and TC is the largest. • Total Profit = TR –TC. Firm’s equilibrium in Perfect competition Quantity 1 2 3 4 5 6 7 8 Price 10 10 10 10 10 10 10 10 TR 10 20 30 40 50 60 70 80 TC 15 20 28 35 46 58 70 82 Profit -5 0 2 5 4 2 0 -2 Cont’d: Types of Profit 1. Supernormal or Economic Profit TR > TC 2. Normal Profit or Breakeven Point TR = TC 3. Subnormal or Losses TR < TC Price/cost TC TR LOSS TR: 40 TC: 35 PROFIT(TR-TC) LOSS OUTPUT 2 4 7 CONCLUSION : the vertical difference between the TR
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conclusion which we can drew, as the prices of the batteries fall down , the volume or the demand for them will go up and the way around. The competitors selling batteries are too many, that makes the price of them goes down as the demand is too high and consumers have got big selection. We consider that as price elasticity of demand, where the elasticity measures the extent to which demand will change. Where we have % change in demand greater than % change in price, we have elastic demand same as
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in the area. Their behaviour is interdependent that is to say what one company does the rest quickly follow. This is prevalent in their pricing behaviour, that is when one raise or lowers the price the others follow. What is happening there is that to increase market share companies on compete on a non-price basis – that is, advertisement, quality and the like. Pizza products are homogenous – they are similar but not necessarily identical. The market structure is an oligopoly. It has also been noted
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Principles of Microeconomics, 8e (Case/Fair) Chapter 5: Elasticity Elasticity Multiple Choice Refer to the information provided in Figure 5.1 below to answer the questions that follow. [pic] Figure 5.1 1) Refer to Figure 5.1. The demand for tickets is A) perfectly elastic. B) perfectly inelastic. C) unitarily elastic. D) income elastic. Answer: B Diff: 1 Type: F 2) Price is determined entirely by demand when A)
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