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Definitions
Elasticity
Total Revenue
Demand Curve
Misc.
100
A relation showing the quantities of a good that consumers are willing and able to buy at various prices per period, other things constant
Demand
100
T/F Elasticity of demand measures the percentage change in quantity demanded divided by percent change in price
True
100
What is the total revenue equation?
Price X by the quantity demanded
100
T/F A demand curve isolates the relation between price and quantity demanded when other factors that could affect demand are assumed constant
True
100
Products that can be used in place of each other
substitutes
200
The change in total utility resulting from a one-unit change in consumption of a good
marginal utility
200
Demand is more elastic at high or low prices?
high
200
Quantity- 20,000 Price -$2.50
$50,000
200
The demand for a normal good _______ as money income increases.
Increases
200
Consumer preferences; likes and dislikes in consumption; assumed to be constant along a given demand curve
tastes
300
A curve or line showing the quantities of a particular good demanded at various prices during a given time period, other things constant
Demand Curve
300
Normally the demand curve is a straight line that slopes from _____ to ____. Right to left or left to right
Left to right
300
Price- $5.75 Quantity- 3500
$20,125
300
The demand for an inferior good actually decreases as money income _______.
increases
300
Provide example of complement products
pizza and soft drink hamburger and fries
400
The demand of an individual consumer
Individual demand
400
Elasticity expresses a relationship between the _____ and ____.
Price and quantity
400
What normally happens when to total revenue when price decreases?
Producers are paid less for each unit tends to decrease total revenue
400
What does it mean when the demand curve shifts to the right?
demand increases
400
Increase in the size of population is considered one of the determinants of demand. What is the name of the determinant?
The number and composition of consumers
500
Measures how responsive quantity demanded is to a price change; the percentage change in quantity demanded divided by the percentage change in price
Elasticity of demand
500
When the price of tacos went from $2.50 to $2.75, sales declined from 150 to 125 per day.
25/150= 0.166 .25/2.50= 0.1 .166/.1=1.6 Elastic
500
Calculate total revenue Part 1-$2.5 Part 2-$1.5 Quantity-3500
$14,000
500
What does it mean when a point is inside the demand curve?
inefficient
500
The more of a good a person consumes per period, the smaller the increase in total utility from consuming one more unit, other things constant
Law of diminishing marginal utility