ZEEZDM Economics 165 Final Exam Spring 1995 1. Economic models or theories a. are limited to variables that are directly (positively) related * b. are simplifications of the real world they represent c. cannot be tested empirically d. are limited to variables that are inversely related 2. Allocative efficiency means that a. opportunity cost has been reduced to zero * b. resources are allocated to the use which has the highest value to society c. technological efficiency has not been
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Economics How The Market Works THE ECONOMIC PROBLEM WHAT IS THE PROBLEM? Needs‚ Wants and Resources Needs Something essential to survival Wants Something you would like to have Resources Something used to produce output FACTORS OF PRODUCTION Can’t produce enough goods and services to satisfy everyone’s wants and needs Economic resources are scarce‚ human wants are infinite Factors of Production Factor Definition Examples Land Includes both land itself and all natural resources. Naturally
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the elasticity of demand for a vertical demand curve? . What is the elasticity of demand for a horizontal demand curve? . What is the elasticity of demand if a price increase leads to an increase in total revenue? elastic / inelastic. What is the numerical value for the elasticity of demand if a 2% price decrease leads to a 6% increase in quantity demanded? . 2. Consider the following demand schedule for widgets: price ($ per widget) Quantity
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problems between peoples unlimited want for oil versus a finite quantity of oil. Therefore shortages‚ coupled rising extraction costs will result in varied impacts on the oil market in terms of demand. Oil is a product which is seemingly inelastic; a product is “inelastic if a change in the price will lead to a proportionately smaller change in the quantity demanded”. (Begg‚ D‚ & Ward‚ D‚ 2009‚pp.38) This conclusion is based upon a series of determinants of elasticity. Firstly the numbers of substitutes
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Economics Exam Notes Micro Economics DEMAND The nature of markets • A market is where buyers and sellers come together to carry out an economic transaction The law of demand • The law of demand states that “as the price of a product falls‚ the quantity demanded of the product will usually increase‚ ceteris paribus” o Ceteris paribus is an assumption that means “all other things being equal” The demand curve The non-price determinants of demand • There are many factors that determine
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changes in cost‚ technology and demand conditions Assumptions Rivals will match a price decrease but ignore a price increase. Therefore‚ the oligopolist’ demand curve will be elastic for price increase and inelastic for price decrease. Show two demand curves: elastic and inelastic Suppose the price charged is determined at P* • If firm raises its price above P*‚ rivals will
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is above MC‚ so a zero profit as it sets P = MC is incorrect. The competition feature of monopolistic competition suggests that firms enter as long as there is positive profit. As more firms enter‚ each firm’s demand becomes increasingly flat—more elastic—until P = ATC and profit goes to zero. Materials * Neither Productive nor Allocative Efficiency Concept: Characteristics of Market Structures Mastery | 100% | Questions | * 5 | Materials on the concept: * Demand as Seen by a Purely
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TUTORIAL 2: Topic 1: The Firm and Its Goals 1) a. If a stock is expected to pay an annual dividend of $20 forever‚ what is the approximate present value of the stock‚ given that the discount rate is 5%? b. If a stock is expected to pay an annual dividend of $20 forever‚ what is the approximate present value of the stock‚ given that the discount rate is 8%? c. If a stock is expected to pay an annual dividend of $20 this year‚ what is the approximate present value of the stock
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Bradford University School of Management FT MBA 2007/2008 Business Economics (MAN4101M) Assessed coursework I certify that this assignment is the result of my own work and does not exceed the word count noted below. Bradford‚ 19th November 2007 ______________________________________ Word Count (excluding tables‚ diagrams and reference): 1750 Market Equilibrium Introduction: Market is a place where buyers and sellers come together and a good is offered for sale by producers and purchased by
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MBA Managerial Economics Review Questions for the Final Exam (Illustrative Answers) PRICE IS LOWER IN A MORE ELASCTIC MARKET!!!!!!!!!! 0.1-1 Introduction:Managerial Decision-Making and Market Processes (a) How does operational effectiveness differ from organizational strategy? Operational effectiveness is achieving excellence in individual activities while organizational strategy is about combining these activities to fit and reinforce one another and create competitive advantage and
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