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Flashcards in Ch 9 Deck (20):
1

What is the law of demand?

Other things equal, consumers purchase more of a product when the price declines and less when it's price increase.

2

How the responsiveness of consumer to price change is measured?

By product's price elasticity of demand.

3

Demand is elastic if?

Ed>1

4

Demand is inelastic if?

Ed<1

5

Demand is unit elastic if?

Ed=1

6

Total revenue formula?

Price X Quantity = Total Revenue

7

If demand is elastic

-P +TR

8

If demand is inelastic

P- will -TR

9

If demand is unit elastic

P- or P+ wouldn't change TR

10

Immediate Market Period?

It is a period of time which producers can not respond to a change in price with a change in quantity supplied.

11

Short run in Microeconomics

Period of time too short to change plant capacity, but long enough to use the fixed-sized plant more or less intensively.

12

Long run in Microeconomics

Time period long enough for firms to adjust their plant sizes and for new firms to enter the market.

13

Cross elasticity of demand

Measures how sensitive consumer purchases of one product (X) are to a change in the price of some other product (Y).

14

Normal Goods

More Income = More Demand / Positive

15

Inferior Goods

More income = Less Demand / Negative

16

Elasticity?

Responsiveness of quantity demanded to change in price.

17

Quantity in demanded in Perfectly Inelastic Demand

Not effected by a price change.

18

Determinants of Price Elastic

More good substitutes like; Luxuries, large portions of income, and large time frame.

19

Determinants of Price Inelastic

Fewer good substitutes like; Necessities, small portions of income, and shorter time frame.

20

What is utility?

the opportunity cost of consumption.