question
In the general formula for price elasticity of demand, when is the coefficient of elasticity of demand inelastic?
answer
when the elasticity is less than one in absolute value
question
What is the range of elasticity of demand when a price cut leads to an increase in total revenue?
answer
Elastic
question
· Necessitates are _ in demand
answer
inelastic
question
_ of demand deals with consumer response to changes in price
answer
Price elasticity
question
the definition of the price elasticity of demand in terms of its basic formula
answer
Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price.
question
Know how to interpret a given price elasticity of demand
answer
consumers being very sensitive to changes in price
question
What is true when demand for a product is elastic?
answer
If the elasticity quotient is greater than or equal to one, the demand is considered to be elastic.
question
What must be true of the price elasticity of demand for a good to increase total revenue when its price increases?
answer
if the price for an inelastic good is increased and the demand does not change, the total revenue increases due to the higher price and static quantity demanded.
question
What happens to total revenue when there is a price change for a good having unitary elasticity?
answer
If demand has a unitary elasticity at that quantity, then a moderate percentage change in the price will be offset by an equal percentage change in quantity
question
the determinants of elasticity of demand
answer
price levels, the type of product or service, income levels, and the availability of any potential substitutes
question
Can total product (TP) continue to increase when marginal product (MP) is decreasing
answer
When the marginal product of a variable input falls, total product also falls.
question
Know the formula for total profit (net revenue)
answer
Net profit = Total Revenue - Total Expenses
question
What happens to total variable costs (TVC) when output Increases?
answer
Total variable costs (TVC) will increase as output increases.
question
In the short run,what are total costs (STC) when output Is zero?
answer
In the short run, total cost is equal to zero when output is equal to zero
question
Know the definition of total revenue (TR)
answer
Total revenue is the total receipts a seller can obtain from selling goods or services to buyers.
question
Know the definition of marginal product
answer
The marginal product of a business is the additional output created as a result of additional input placed into the company.
question
the Law of Diminishing Returns
answer
The law of diminishing marginal returns states that adding an additional factor of production results in smaller increases in output.
question
What is true for inputs in the short run?
answer
All inputs are fixed in the short run
question
How would you define the long run?
answer
The long run is a period of time in which all factors of production and costs are variable.
question
How can one identify the fixed cost?
answer
Take your total cost of production and subtract your variable costs multiplied by the number of units you produced
question
How can one identify the variable cost?
answer
The formula for calculating unit variable costs is total variable expenses divided by the number of units.
question
How does one define average total cost?
answer
the average cost per unit of output
question
How does one define marginal cost?
answer
Marginal cost refers to the increase or decrease in the cost of producing one more unit or serving one more customer
question
How does one define Economic Cost?
answer
the combination of losses of any goods that have a value attached to them by any one individual
question
Know how to compute marginal product?
answer
calculating the change in quantity produced or change in production level and then divide the same by the change in the factor of production.
question
how to identify where diminishing returns begin
answer
it can be identified by taking the second derivative of that return function.
question
Can firms in an industry characterized by monopolistic competition alter the market price?
answer
the monopolistic competitor can raise its price without losing all of its customers or lower the price and gain more customers.
question
What is true of the market demand curve for a product in a perfectly competitive market?
answer
a downward sloping line
question
What is true of barriers to entry in perfectly competitive markets?
answer
There are no barriers to entry into or exit out of the market.
question
What price is charged in a perfectly competitive market?
answer
In a perfectly competitive market, price equals marginal cost and firms earn an economic profit of zero
question
Which of the four market types has the greatest amount of power?
answer
Monopoly
question
What is an oligopoly?
answer
a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies
question
Why does a perfectly competitive firm charge the price that it does?
answer
a perfectly competitive firm must accept the price for its output as determined by the product's market demand and supply, it cannot choose the price it charges.
question
What happens if a perfectly competitive firm raises its price above current market price?
answer
it will lose its entire market share, and sales will reduce to 0
question
What type of demand curve does a seller in perfect competition have?
answer
A perfectly competitive firm's demand curve is a horizontal line at the market price
question
What does the demand curve faced by a perfectly competitive firm indicate or suggest?
answer
This point means a firm that is a price taker must take the equilibrium market price as given, and the firm faces a perfectly elastic demand.
question
At what level of output does a perfectly competitive firm produce? What is true there?
answer
The rule for a profit-maximizing perfectly competitive firm is to produce the level of output where Price= MR = MC
question
What will happen in a perfectly competitive firm having greater than normal profits?
answer
New firms may enter the industry. Existing firms may get larger.
question
To what level or point will price of a perfectly competitive firm tend to fall in competitive long-run equilibrium?
answer
in the long-run, economic profit cannot be sustained. (zero profit)
question
Profit maximizing level of output
answer
marginal revenue equals marginal cost (MR=MC)
question
Profit maximizing level of price
answer
Where the lines intersect
question
Level of profit at the profit maximizing level of output
answer
Maximum profit is the level of output where MC equals MR.
question
Where a less than normal profit or economic loss is earned by a firm
answer
An economic profit or loss is the difference between the revenue received from the sale of an output and the costs of all inputs used, as well as any opportunity costs.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
