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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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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Section One: Multiple Choice 1. If a 20% decrease in the price of long-distance phone calls leads to a 35% increase in the quantity of calls demanded‚ you may conclude that the demand for phone calls is a. elastic b. inelastic c. unit elastic d. stretchy elastic 2. Which of the following pairs are examples of substitutes? a. Popcorn and soda b. Automobiles and bicycles c. Boats and fishing tackle d. Wine and cheese 3. If a price in a competitive market is “too high to clear the
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Oligopolistic markets‚ such as supermarkets or car manufacturing‚ can be defined in terms of market structure or in terms of market conduct. An oligopolistic market is one that has several dominant firms with the power to influence the market they are in; an example of this could be the supermarket industry which is dominated by several firms such as Tesco‚ Sainsbury’s‚ and Waitrose etc... Furthermore an oligopolistic market can be defined in terms of its structure and its conduct‚ which involve
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change in one variable to the percent change in another variable. It is the measure of the responsiveness of quantity demanded to a change in the price level of the product‚ a product may be perfectly elastic‚ perfect inelastic and unitary‚ when a good’s elasticity is perfectly inelastic then a change in the price of the product will not change the amount demanded‚ a perfect elastic product is that which its demand will change by a large magnitude than the change in price. It is a tool for measuring
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Associate Level Material Appendix B Price Elasticity and Supply & Demand Xeco – 212 02/07/2012 Peter D. Brothers Fill in the matrix below and describe how changes in price or quantity of the goods and services affect either supply or demand and the equilibrium price. Use the graphs from your book and the Tomlinson video tutorials as a tool to help you answer questions about the changes in price and quantity Event | Market affected by event | Shift in supply‚ demand‚ or both.
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Economics Unit 1 Review Economics – the study of how to distribute scarce resources among competing ends Microeconomics – focuses on individual consumers and businesses Macroeconomics – takes a broad view of the economy 3 Basic questions any society must answer * What to produce * How to produce * For whom to produce Economists assume that economic decision makers maximize their own utility. Utility is the satisfaction or pleasure from any action. Economists assume the
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309.1.2 Supply and Demand 1) Discuss elasticity of demand as it pertains to elastic‚ unit‚ and inelastic demand. a) Elasticity of demand are circumstance at which a good or service varies according to prices. These circumstances measures consumers reaction and how they respond to the changes in price by changing the quantity demanded. (PE-of-D = (% Change in Quantity Demanded/% Change in Price)) – When the price for a number of units decreases from positive units pre-dollars to negative
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in price of one percent causes one percent change in quantity demanded. Another range of elasticity is unit elasticity of demand. It occurs when a change of one percent causes exactly one percent to change in quantity demanded. A third range is inelastic demand. It is the opposite of elastic demand. It occurs when a change of a price of one percent is less than one percent in the quantity demanded (Miller‚ 2013). There three main determinants of price elasticity of demand. One determinant is the
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of consumer income devoted to a good‚ and consumer’s time horizon‚ and give examples of each. Then‚ I will explain the logical impacts to business decision making that result from each. Last‚ I will differentiate between perfectly inelastic demand and perfectly inelastic demand‚ and illustrate the difference between the terms. Elasticity of demand‚ also known as price demand elasticity‚ is defined as the measurement of “the responsiveness of demand for a product following a change in its own price”
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