Q1: A: Demand increases B: Demand falls C: Let A and B be substitute goods. If the price of A increases, the quantity demanded of A decreases (law of demand). Because consumers can easily buy good B instead of good A, they will purchase more of good B (because good A is more expensive) and hence the demand for good B will increase. D: If goods A and B are complements, an increase in the price of A will result in a leftward movement along the demand curve of A and cause the demand curve for B
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of a product and these include, substitution effect, competition, the effect of economic factors and the price elasticity of demand. The substitution effect may make a firm choose to reduce the price of a product because if the price of a substitute good increases, then firms would reduce the price of the good they are selling so that consumers buy their product as the quantity demand for their product is likely to increase. This is so that they gain a maximisation of profits from the products that
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the different market structures that made up the firms in his town. With this information is where the explaining of the different firms and their markets was explained. There was also discussion on the flow of the market firms and how the price elasticity worked within these firms markets. There was need to describe the high entry barriers that firms face when entering into the market when competing with other more established firms, that have known names against a small proprietors entering this
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where resource allocation is determined mainly by market forces of demand and supply Section 2 monopolistic competition a market in which there are many buyers and many sellers, with very low barriers to entry and a degree of product differentiation oligopoly an industry where there are a few large firms which take up majority of market share, significant barriers to entry and a very low degree of product differentiation demand the quantity of a product than buyers are willing and able to buy
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human behavior as a relationship between ends and scarce means which have alternative uses. This definition is according to Robinson. While Marshall defined economics as a study of mankind in an ordinary business of life thus it inquires how he gets income and how he uses it. This definition clearly defines that economics is about studying wealth and mankind. The two definitions have various implications among them, is that human beings have needs which are unlimited and he can’t be satisfied completely
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the price elasticity of demand is: A. 0.5 B. 0.9 C. 1.11 D. 2 2. A perfectly inelastic demand schedule: A. rises upward and to the right, but has a constant slope. B. can be represented by a line parallel to the vertical axis. C. cannot be shown on a two-dimensional graph. D. can be represented by a line parallel to the horizontal axis. 3. The price elasticity of demand coefficient measures: A. buyer responsiveness to price changes. B. the extent to which a demand curve shifts
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Pakistan (SBP); “Price and income Elasticity of Imports” gives some intriguing insight into the country’s Balance of Payment (BoP) accounts and its relation to growth. The relevance of the study cannot be ignored in the current economic context when country is experiencing large current account deficits monthly. The study highlights that many developing countries rely extensively on running external deficits in order to spur medium to long term growth. Import price elasticity The report points out
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Professor Kosten Banifoot, a prominent supporter of the National Aeronautics and Space Administration’s (NASA) space shuttle program, estimated that the gains from the program are currently $24 billion per year (an average of $6 billion per launch) and that its costs are relationship between the number of shuttles launched and the total cost of the program is as described in Table 1.1. On the basis of these estimates, Professor Banifoot testified before Congress that NASA should definitely expand
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which organizations operate. Learning Outcomes At the end of this course the student will be able to • − Use the theory of the firm to model business organizations • − Apply demand theory to establish the elasticity of demand • − Use demand estimation to forecast demand trends and change • − Apply production theory to manage production • − Use cost theory to establish short and long run behavior • − Describe market structures to establish market equilibrium
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6. The demand function is Q = 100 –.5P. The cost function is TC = C = 100 + 60(Q) + (Q)26. The demand function is Q = 100 –.5P. The cost function is TC = C = 100 + 60(Q) +(Q)2 a. Find MR and MC. MR = 520 – 4Q MC = 100 + 2Q MR = 520 – 4Q MC = 100 + 2Q 520 – 4Q = 100 + 2Q b. Demonstrate that profit is maximized at the quantity where MR = MC. Profit = TR – TC TR = P*Q = ($380 per unit)(70 units) = $26,600 2 TC = 100Q + Q + 50 = 100(70) + (70)(70) + 50 = $11,950 Profit = $14650 c. Derive the
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