CPA BEC EXAM

CPA BEC EXAM Demand Elastic means - ANSWER-large ∆ in demand when there is a small ∆ in price Price Elasticity of Demand Formula - ANSWER-%∆in quantity demanded / %∆in Price Demand becomes _________ elastic over time - ANSWER-more Goverment actions that affect market equilibrium - ANSWER-price ceiling cost floor (cause qty supplied to exceed qty demanded) a demand curve shifts _________ whereas a supply curve shifts ______ - ANSWER-up/down outward/inward diseconomies of scale - ANSWER-decreasing returns to scale. when 100% increase in inputs only results in 90% increase in outputs Perfect/Pure Competition - ANSWER-horizontal demand curve prices are perfectly elastic many sellers homogenous products no non-price competition (no ads) enter and exit easily (no barriers, ceilings, floors) Pure Monopoly - ANSWER-no close substitutes prices higher and quantity lower than in monopolistic competition Monopolistic competition - ANSWER-many sellers products are close substitutes but NOT identical