Chapter 05 Market Influence on business

Question 1

Supply curve illustrates

Answer 1

price and quantity supplied

Question 2

a decrease in the price complementary good wil

Answer 2

shift the demand curve to the right of the other commodity

Question 3

if demands increase and supply increases equilibrium

Answer 3

will increase

Question 4

perfect inelestic

Answer 4

no decline in demand because of price increase

Question 5

price elasticity demand formula

Answer 5

percentage change in qty/percentage change in price

Question 6

demand is inelastic when the coefficient is less than

Answer 6

1

Question 7

mid point calculation

Answer 7

(Q1-Q2) / (Q1 + Q2) /
[(P1 - P2) / (P1 +P2)

Question 8

vertical line

Answer 8

inelestic - less than 1

Question 9

Horizontal line

Answer 9

elastic - infinite

Question 10

Effect on Revenue -Price Increase

Answer 10

Elastic - decrease
unitary elasticity - no change
inelastic - increase

Question 11

Effect on revenue - price decrease

Answer 11

elastic range - increase
unitary elasticity - no change
inelastic range - decrease

Question 12

if a normal good competes with 30 similar goods and all 31 goods give the consumer equal satisfaction the demand for normal good

Answer 12

relatively elastic

Question 13

The competitive model of supply and demand predicts that a surplus can arise if there is a

Answer 13

minimum price above the equilibrium price

Question 14

A shortage is derived when the government sets below.

Answer 14

the equilibrium price

Question 15

price ceilings

Answer 15

create price below equilibrium

Question 16

explicit cost

Answer 16

cash disbursement out of pocket out lay cost

Question 17

implicit

Answer 17

opportunity cost and the investment

Question 18

Profit Maximization

Answer 18

Marginal revenue should equal marginal cost and anything above the revenue will diminish return.

Question 19

Marginal Product

Answer 19

additional output obtained by adding extra unit. it is computed by dividing the change in total output at a given level of input by change in input

(144-100 unit in output) / (25-20 unit in input)

Question 20

the competitive model of supply and demand predict that the surplus can only arise if there is a

Answer 20

minimum price above the equilibrium