Microeconomics Exam #2 Review QUESTIONS AND
ALL CORRECT ANSWERS 100% SOLVED AND
GUARANTEED SUCCESS!!
Determinants of Price Elasticity of Demand - answer--Availability of substitutes,
Luxury or Necessity, The share of total budget, time dimension
Availability of substitutes - answer--greater the number of substitutes, the more
ELASTIC the demand, when all firms in a market produce products which are
perfect substitutes for each other, the demand is perfectly elastic
Luxury or Necessity - answer--A product is a luxury will have more elastic demand
than a product deemed necessity. Luxury is a product that consumers can easily
do without compared to necessity
The share of the total budget - answer--the larger the proportion of a budget the
good constitutes, the more elastic the demand
Time dimension - answer--the more time the consumer is given to adjust to the
price change, the more elastic the demand
Total Revenue= - answer--=Price*Quantity=P*Q
, The price of a good being sold multiplied by the number of units sold
Relationship between price elasticity and total revenue - answer--both
calculations use price and quantity, they are directly proportional. All varies on
price.
Total Revenue decreases... - answer---Elastic (Ed>1) and Price increases
-Inelastic (Ed<1) and Price decreases
Total Revenue increases... - answer---Elastic (Ed>1) and Price decreases
-Inelastic (Ed<1) and Price increases
No change in total revenue... - answer---Unit Elastic (Ed=1)
Utility - answer--the satisfaction associated with the consumption of goods and
services
Marginal utility - answer--the change in total utility divided by the change in
quantity consumed
ALL CORRECT ANSWERS 100% SOLVED AND
GUARANTEED SUCCESS!!
Determinants of Price Elasticity of Demand - answer--Availability of substitutes,
Luxury or Necessity, The share of total budget, time dimension
Availability of substitutes - answer--greater the number of substitutes, the more
ELASTIC the demand, when all firms in a market produce products which are
perfect substitutes for each other, the demand is perfectly elastic
Luxury or Necessity - answer--A product is a luxury will have more elastic demand
than a product deemed necessity. Luxury is a product that consumers can easily
do without compared to necessity
The share of the total budget - answer--the larger the proportion of a budget the
good constitutes, the more elastic the demand
Time dimension - answer--the more time the consumer is given to adjust to the
price change, the more elastic the demand
Total Revenue= - answer--=Price*Quantity=P*Q
, The price of a good being sold multiplied by the number of units sold
Relationship between price elasticity and total revenue - answer--both
calculations use price and quantity, they are directly proportional. All varies on
price.
Total Revenue decreases... - answer---Elastic (Ed>1) and Price increases
-Inelastic (Ed<1) and Price decreases
Total Revenue increases... - answer---Elastic (Ed>1) and Price decreases
-Inelastic (Ed<1) and Price increases
No change in total revenue... - answer---Unit Elastic (Ed=1)
Utility - answer--the satisfaction associated with the consumption of goods and
services
Marginal utility - answer--the change in total utility divided by the change in
quantity consumed
