CHAPTER 10 PRICE-SEARCHER MARKETS WITH LOW ENTRY BARRIERS QUESTIONS 1 THROUGH 10 ARE A SUGGESTED CHAPTER QUIZ. 1. In a competitive price-searcher market‚ the firms will a. be able to choose their price‚ and the entry barriers into the market will be low. b. be able to choose their price‚ and the entry barriers into the market will be high. c. have to accept the market price for their product‚ and the entry barriers into the market will be low. d. have to accept the market price for their
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above‚ do CD’s have elastic‚ inelastic or unit elastic demand? Explain your answer. 3. Explain the significance of the co-efficient of the PED calculated in question 1. What exactly does it tell you? 4. If a 7% decrease in the price of peanut butter causes total revenue to increase‚ what do you know about the demand for peanut butter? 5. Which of the following two goods would you expect to have more ELASTIC demand: A Philips
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of gas a lot of consumers search for the gas station with the cheapest gas. So if you are a gas station owner‚ if you have the lowest price you are going to get the business. Determine if the demand for the following products is price elastic or price inelastic‚ and explain your answer. In your explanation‚ be sure to include how the necessity of a good and the
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Economics (Week 1) Opportunity Cost My significant other and I recently made a decision for me to quit my job and go back to school. Our decision was based on my unhappiness at work; however‚ we also started looking at the long-term financial security aspect of it. The alternatives considered were to pursue a health related job where I would be happier or‚ go back to school to acquire a nursing degree. We came to our final decision based on my dream of wanting to be a nurse. The future long-term
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to the market price‚ the higher the consumer surplus‚ as consumers are spending less than they are willing to‚ and the less spent‚ the lower the revenue will be for the good. Materials • Producer Surplus 2 . An increase in the price of an inelastic good • • • • A. decreases revenues B. decreases the percentage change in quantity less than the percentage change in price C. increases revenues D. increases the percentage change in quantity more than the percentage change in price
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ECONOMICS Economic Problem * Unlimited wants‚ limited resources Economic Systems * Questions to answer: 1. What to produce? 2. How much to produce? 3. How to produce? 4. For whom to produce? * Criteria to classify economic systems 1. Productive resources owned by private individuals (private sector) or government (public sector) 2. Role of market forces of demand and supply in allocating resources‚ determining prices‚ distributing incomes 3. Role of government in production
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Public Revenue The income of government from all the sources is called Public Revenue. ●Canons of Taxation : Adam Smith’s canon of taxation: 1. Canon of Equality: According to this canon‚ every person have to pay tax according to their ‘ability to pay’. It simply doesn’t mean that all person have to pay equal amount of tax. It simple means‚ if a person is rich i.e.‚ his paying ability is high‚ he will pay high tax whereas if a person is poor‚ i.e. his paying ability is low‚ he will pay less
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to substantiate your answer. THE ANSWER DPENDS ON THE VALUE OF ELASTICITY of demand. If demand is elastic then revenues will fall‚ whereas if demand is inelastic then revenues will rise. This is explained by the relation: change in revenues/ change in price= Q( 1+elasticity). If demand is elastic then the expression becomes negative so that price rises causes revenues to fall. When dmand is inelastic a price rise causes revenues to fall as the expression becomes negative. 2. Show graphically and
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factor that determines it. Elastic Demand. The demand of a product is sensitive to price change. Elastic Supply. supply of a good or services that increases or decreases as the price of an item goes down or up. Engel Curve. It shows the relationship between income and the demand for a product over time. Income Elasticity of Demand. (YED). Is a measure of how much the demand for a product changes when there is a change in the consumer’s income. Inelastic Demand. Is the situation in
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definition of each of them. According to Bostock (2014: presentation) price can be inelastic or elastic‚ so inelastic means that a 1 % change in the price of a good or service has less than 1 % change on the quantity of supply or demand. Logically‚ the elastic price means that price change of 1 % causes more than 1 % change in the quantity demanded or supplied. Basically‚ most of goods and services in the world are elastic as far as they are not unique and can be replaced by similar product with best
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