one important determinant of an item's price of elasticity of supply is:
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passage of time
Define opportunity cost.
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The highest-valued alternative that must be sacrificed in order to get
something else.
Quantity Demanded by an individual
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Depends on price, utility from good, and other factors. If P of good is high
- MU/P goes down so consumer buys less.
If P goes down- MU/P goes up and consumer buys more.
change in supply
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a shift of the supply curve, which changes the quantity supplied at any
given price
Government Failure
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government intervention that fails to improve economic outcomes
As a result of a fare war, the price of a luxury cruise falls 20%.
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Does luxury cruise companies' total revenue rise or fall?
Active Learning 3 Elasticity and changes in equilibrium
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The supply of beachfront property is inelastic. The supply of new cars is
elastic.
Suppose population growth causes demand for both goods to double (at
each price, Qd doubles).
For which product will P change the most?
For which product will Q change the most?
Ceteris Paribus
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other things equal
Cross-price elasticity of demand
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How much the Qd of one good responds to a change in the price of
another good
Percentage change in Qd of the first good
Divided by the percentage change in price of the second good
Substitutes: cross-price elasticity > 0
Complements: cross-price elasticity < 0
Mixed Market
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, mix of market and command. government has some involvement but
people can create and sell goods
luxury:
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elastic
compliments
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things that are used together
Consumer Choice
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how consumers decide what to purchase.
How do we decide what to buy?
Why do we feel so good about our purchases?
Why do we buy certain products?
law of diminishing marginal utility
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passage of time
Define opportunity cost.
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The highest-valued alternative that must be sacrificed in order to get
something else.
Quantity Demanded by an individual
,Give this one a try later!
Depends on price, utility from good, and other factors. If P of good is high
- MU/P goes down so consumer buys less.
If P goes down- MU/P goes up and consumer buys more.
change in supply
Give this one a try later!
a shift of the supply curve, which changes the quantity supplied at any
given price
Government Failure
Give this one a try later!
government intervention that fails to improve economic outcomes
As a result of a fare war, the price of a luxury cruise falls 20%.
Give this one a try later!
Does luxury cruise companies' total revenue rise or fall?
Active Learning 3 Elasticity and changes in equilibrium
,Give this one a try later!
The supply of beachfront property is inelastic. The supply of new cars is
elastic.
Suppose population growth causes demand for both goods to double (at
each price, Qd doubles).
For which product will P change the most?
For which product will Q change the most?
Ceteris Paribus
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other things equal
Cross-price elasticity of demand
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How much the Qd of one good responds to a change in the price of
another good
Percentage change in Qd of the first good
Divided by the percentage change in price of the second good
Substitutes: cross-price elasticity > 0
Complements: cross-price elasticity < 0
Mixed Market
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, mix of market and command. government has some involvement but
people can create and sell goods
luxury:
Give this one a try later!
elastic
compliments
Give this one a try later!
things that are used together
Consumer Choice
Give this one a try later!
how consumers decide what to purchase.
How do we decide what to buy?
Why do we feel so good about our purchases?
Why do we buy certain products?
law of diminishing marginal utility
