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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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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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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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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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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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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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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(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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