Topics in Demand and Supply Analysis

Question 1

A good’s own- price elasticity of demand is equal to

Answer 1

the percentage change in

quantity demanded divided by the percentage change in price. (slope of the demand function X ratio price-to-quantity)

Question 2

To be precise, when the
magnitude (ignoring algebraic sign) of the own- price elasticity coefficient has a value of less than one, demand is said to be ______.

Answer 2

inelastic

Question 3

And when the elasticity coefficient is equal to negative one, demand is said to be _________.

Answer 3

unit elastic, or unitary elastic.

Question 4

_______ profit is defined as the difference between total revenue
(TR) and total economic costs (including opportunity costs)

Answer 4

Economic

Question 5

What are the SATC and the LRAC curves?

Answer 5

short- run average total cost and corresponding long- run average total cost curves

Question 6

The minimum point on the LRAC curve is referred to as the ________________.

Answer 6

minimum efficient

scale

Question 7

Marginal revenue per unit is defined as the change in total revenues divided by ______

Answer 7

he change in quantity sold

Question 8

The firm operating at greater than long- run efficient scale is subject to __________.

Answer 8

diseconomies of scale