1A) What is the definition of opportunity cost? The best alternative that we forgo‚ or give up‚ when we make a choice or a decision is called the opportunity cost of that decision. 1B) Eason wants to spend $15 to buy a pack of sandwiches or a bowl of fish-ball noodles form a street hawker. Explain the effect on Eason’s opportunity cost of buying the sandwiches if a cockroach is found inside the noodle soup. Eason’s opportunity cost of buying the sandwiches is a bowl of fish-ball noodles‚ however
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increased violence‚ anti-gun activists‚ pricing and sales tax‚ an uninformed economist might view the demand for guns to be completely elastic. My opinion is that the civilian purchase and ownership of guns by United States citizens is moderately inelastic due to the Bill of Rights and for personal protection of one’s self‚ family and property. Though ownership of firearms is regulated by the United States Government with waiting periods and background checks‚ however private citizens – like those
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(shortage) which will result in enormous price risings. But one important thing to notice is that the demand is slightly decreased. This is because food is inelastic. What inelasticity means is: “When a price change has no effect on the supply and demand of a good or service‚ it is considered perfectly inelastic. An example of perfectly inelastic demand would be a life saving drug that people will pay any price to obtain. Even if the price of the drug were to increase dramatically‚ the quantity demanded
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In this paperwork of ECO 204 Week 1 Quiz you will find the answers on the next questions: 1. For perfectly price inelastic supply supply determines price solely. demand determines price solely. only a government can set the price. either supply or demand may set the price. 2. For Matthew‚ the marginal utility of the 9th soda in a day is positive and the marginal utility of the 10th soda in a day is zero. This implies that Matthew’s demand curve for sodas per day will
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quantity demanded by the proportionate change in price. When PED is greater than one (PED > 1) demand is said to be elastic When PED is between zero to one (0 > PED > 1) demand in said to be inelastic When PED is equal to one (PED > 1) demand is said to be unit-elastic (unitary elasticity) A perfectly inelastic demand curve‚ perpendicular to the X-axis‚ has zero elasticity. A perfectly elastic demand curve‚ horizontal to X axis‚ is infinitely elastic. The price elasticity of demand for a particular
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in price from P to P1 and a decrease in quantity from Q to Q1. The tax is indicated on the graph as the difference between S and S1. However‚ the effectiveness of this tax depends on the price elasticity of demand for the product. If the PED is inelastic‚ consumers will be unresponsive to a change in price‚ so producers may pass on most of the tax burden to consumers‚ who will continue to buy the product. The tax set by the government must be equal to the size of the external costs associated with
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quantity of the output. Inability of individual farmers to engage in demand creation activities for their own produce. Seasonality of production. Bulk in commodities relative to value. Perishability of unprocessed products. Demand is relatively inelastic i.e. increase of supply‚ leading to the lowering of prices‚ doesn’t substantially increase the consumption of agricultural products. Factors leading to the Emergence of Agricultural Marketing organizations. 1. Weaknesses of farmers as bargainers
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change in its price. If a relatively small change in price leads to a relatively large change in demand‚ the product is said to be ’elastic’. Whereas if quantity demanded is relatively unresponsive to a change in price the product is said to be ’inelastic’. Price elasticity of demand can be given a numerical value which is just a number and not in terms of any particular unit. The resulting numerical figure will always be a negative number due to the inverse relationship between price and quantity
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methods are price discrimination‚ value-based pricing and cost-plus pricing. Elastic vs. Inelastic Goods * Economists can determine price sensitivity of products through a price elasticity analysis. Some products‚ such as milk‚ are consider a necessity rather than a luxury and will purchase at most price points. This type of product is considered inelastic. When a business knows they are selling an inelastic good‚ they can make marketing and pricing decisions easier. Operations and Production
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more than 1‚ and would therefore be considered elastic. If the ratio were greater than 1‚ that product would then be considered inelastic‚ as the percentage change in demand was less than that of the percentage change in price. For example‚ if a product were to increase in price by 10%‚ and the overall demand fell by only 5%‚ then the good would be considered inelastic. If a 10% rise in price caused a 20% fall in demand that same good is elastic (McConnell & Brue‚ 2004). Since Apple released the
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