Barriers to Entry in Monopolies

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following factors tends to make demand more price elastic?

  • Necessities versus luxuries
  • Proportion of income devoted to the product
  • Availability of close substitutes (correct)
  • Definition of the market

What does it mean if the price elasticity of demand is greater than 1?

  • The percentage change in quantity demanded is the same as the percentage change in price
  • The percentage change in quantity demanded is greater than the percentage change in price (correct)
  • The percentage change in quantity demanded is less than the percentage change in price
  • The price elasticity is equal to 1 and is called unit or unitary elasticity

Which method is commonly used to calculate price elasticity of demand by measuring elasticity at a particular point on the demand curve?

  • Both methods are equally common
  • Point Elasticity of Demand Method (correct)
  • Midpoint (Arc Elasticity of Demand) Method
  • There is no commonly used method

What happens to total expenditure when demand is price elastic?

<p>Price and total expenditure move in opposite directions (B)</p> Signup and view all the answers

Which of the following factors can cause a decrease in supply?

<p>An increase in input prices (C)</p> Signup and view all the answers

What happens to supply when there are more sellers in the market?

<p>Supply increases (B)</p> Signup and view all the answers

What is the definition of equilibrium in a market?

<p>The price where the quantity demanded is the same as the quantity supplied (A)</p> Signup and view all the answers

What does a surplus indicate in a market?

<p>The quantity supplied is greater than the quantity demanded (A)</p> Signup and view all the answers

Which of the following is NOT an assumption of the competitive market model?

<p>Goods produced are differentiated (B)</p> Signup and view all the answers

What is the outcome of the market model if the assumptions hold?

<p>The resulting allocation of resources will be efficient (B)</p> Signup and view all the answers

What is a competitive market?

<p>A market in which there are many buyers and sellers so that each has a negligible impact on the market price (C)</p> Signup and view all the answers

Why do sellers in a competitive market have little reason to charge less than the going price?

<p>Because products are homogeneous (D)</p> Signup and view all the answers

Which of the following is NOT a source of barriers to entry for a monopoly?

<p>Low production costs (D)</p> Signup and view all the answers

What is the key difference between a competitive firm and a monopoly?

<p>The ability to influence the price of its output (B)</p> Signup and view all the answers

Why does a monopoly firm have to lower the price of its good to increase the amount sold?

<p>To increase total revenue (B)</p> Signup and view all the answers

What are the two effects on total revenue when a monopoly increases the amount it sells?

<p>The output effect and the price effect (A)</p> Signup and view all the answers

Which one of these is the correct formula for calculating the price elasticity of supply using the midpoint method?

<p>(\frac{{\text{{Percentage change in quantity supplied}}}},{{\text{{Percentage change in price}}}} \times \frac{{\text{{Average price}}}},{{\text{{Average quantity supplied}}}}) (C)</p> Signup and view all the answers

Which one of these is a key determinant of the price elasticity of supply?

<p>The size of the firm/industry (C)</p> Signup and view all the answers

What is the formula for calculating total revenue?

<p>Total revenue = price of the good (\times) quantity sold (D)</p> Signup and view all the answers

What is the definition of monopoly?

<p>A firm that is the sole seller of a product without close substitutes (A)</p> Signup and view all the answers

According to the text, what is the key difference between the marginal revenue of a competitive firm and the marginal revenue of a monopoly?

<p>The marginal revenue of a competitive firm is equal to its price, whereas the marginal revenue of a monopoly is less than its price. (D)</p> Signup and view all the answers

What is the efficient outcome in a monopoly market?

<p>The efficient outcome is where the demand curve intersects the marginal cost curve, where P=MC. (D)</p> Signup and view all the answers

What is the welfare cost associated with monopoly?

<p>The welfare cost of monopoly is the deadweight loss. (B)</p> Signup and view all the answers

What does total surplus equal in a monopoly market?

<p>Total surplus equals the value of the good to consumers minus the costs of making the good incurred by the monopoly producer. (C)</p> Signup and view all the answers

Where does the monopolist choose the profit-maximizing output?

<p>The monopolist chooses the profit-maximizing output where the marginal revenue and marginal cost curves intersect. (A)</p> Signup and view all the answers

What is the difference between the socially efficient outcome and the profit-maximizing output in a monopoly market?

<p>The socially efficient outcome is where the demand curve intersects the marginal cost curve, whereas the profit-maximizing output is where the marginal revenue and marginal cost curves intersect. (C)</p> Signup and view all the answers

According to the text, what is the law of demand?

<p>The claim that the quantity demanded of a good falls when the price of the good rises (A)</p> Signup and view all the answers

According to the text, what is a substitute good?

<p>Two goods for which an increase in the price of one leads to an increase in the demand for the other (C)</p> Signup and view all the answers

According to the text, what is an inferior good?

<p>A good for which an increase in income leads to a decrease in demand (A)</p> Signup and view all the answers

According to the text, what is the law of supply?

<p>The claim that the quantity supplied of a good rises when the price of a good rises (B)</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Price Elasticity = A measure of the responsiveness of demand or supply to a change in price Commodity = A product that is identical across producers and can be easily substituted Elastic Demand = A situation in which demand for a product changes more than the change in price Inelastic Demand = A situation in which demand for a product changes less than the change in price</p> Signup and view all the answers

Match the following terms with their interpretations:

<p>Highly Elastic = Product is perceived as a commodity by consumers Relatively Elastic = Product is differentiated and meaningful to customers Price Sensitivity = Qualitative measure of how the demand for a product changes with a change in price Price Elasticity = Quantitative measure of how the demand for a product changes with a change in price</p> Signup and view all the answers

Match the following terms with their effects on price elasticity:

<p>Type of product = Affects how much consumers are willing to pay for a product Income of target consumers = Affects how sensitive consumers are to changes in price Health of the economy = Affects consumers' ability to pay for products Competitors' actions = Affects the availability of substitutes</p> Signup and view all the answers

Match the following terms with their descriptions:

<p>Elasticity = Quantitative concept that measures how much demand or supply responds to a change in price Sensitivity = Qualitative concept that describes how demand or supply responds to a change in price Commodity = A product that is identical across producers and can be easily substituted Differentiation = The process of distinguishing a product or service from others to make it more attractive to a particular target market</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Elasticity = A measure of the responsiveness of demand or supply to a change in price Sensitivity = A qualitative measure of how the demand for a product changes with a change in price Commodity = A product that is identical across producers and can be easily substituted Differentiation = The process of distinguishing a product or service from others to make it more attractive to a particular target market</p> Signup and view all the answers

Match the following terms with their effects on price elasticity:

<p>Type of product = Affects how much consumers are willing to pay for a product Income of target consumers = Affects how sensitive consumers are to changes in price Health of the economy = Affects consumers' ability to pay for products Competitors' actions = Affects the availability of substitutes</p> Signup and view all the answers

Match the following terms with their interpretations:

<p>Highly Elastic = Product is perceived as a commodity by consumers Relatively Elastic = Product is differentiated and meaningful to customers Price Sensitivity = Qualitative measure of how the demand for a product changes with a change in price Price Elasticity = Quantitative measure of how the demand for a product changes with a change in price</p> Signup and view all the answers

Match the following terms to their correct definitions:

<p>Price elasticity of demand = A measure of how sensitive the quantity demanded is to its price Inelastic demand = Changes in price have a relatively small effect on the quantity demanded Elastic demand = Quantity falls twice as much as the price increase A/B test = A method to compare two versions of something to determine which performs better</p> Signup and view all the answers

Match the following elasticity values to their descriptions:

<p>$-2$ = A one percent price rise leads to a two percent decline in quantity demanded $-0.5$ = The quantity response is half the price increase $0$ = Consumption would not change at all, in spite of any price increases $1$ = Revenue is maximised when price is set so that the elasticity is exactly one</p> Signup and view all the answers

Match the following terms to their definitions:

<p>Veblen goods = Goods which have positive elasticity, rare exceptions to the law of demand Giffen goods = Goods which have positive elasticity, rare exceptions to the law of demand Qualitative research = Research that aims to get at the underlying reasons for consumer behavior Quantitative testing = Research that deals with numbers and statistics</p> Signup and view all the answers

Match the following terms with their definitions:

<p>In-market A/B test = Putting your product out at the new price point and seeing what the demand is, and comparing it to the same product at a different price Price point = The price at which a product is sold Consumer behavior = The way consumers act and the decision processes they go through when purchasing a product Elasticity = A measure of a variable's sensitivity to a change in another variable</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Current price elasticity = A data point that helps make future decisions Managing price elasticity = Understanding current price elasticity and the factors that are making it elastic or inelastic, and then thinking about how those factors are changing over time Burden of a tax = Can be predicted using the good's elasticity Digital context = A situation where changing the price of a product is easy and inexpensive</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Willingness to pay = What consumers have historically been willing to pay for a particular product Survey responses = A method to get a good sense of willingness to pay Consumer response = The reaction of consumers to a change in the price of a product Market test = A method to understand why consumers are acting the way they are</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Historical sales data = One of the methods used to determine price elasticity Conjoint analysis = One of the methods used to determine price elasticity Test markets = One of the methods used to determine price elasticity Elasticity of −2 = A good with this elasticity has elastic demand</p> Signup and view all the answers

Match the following terms to their definitions related to price elasticity:

<p>Price elasticity = Shows how responsive customer demand is for a product based on its price Elastic product = Sensitive to fluctuations in price Inelastic product = Largely ambivalent about price changes Substitute goods = Products that can be used in place of others; demand for these increases when the price of the compared product increases</p> Signup and view all the answers

Match the following terms to their descriptions in the context of price setting:

<p>Price increase = A change in the price of a product or service from a lower to a higher amount Price decrease = A change in the price of a product or service from a higher to a lower amount Demand = The quantity of a product or service that consumers are willing and able to purchase Price elasticity of demand = A measure of the responsiveness of quantity demanded to a change in price</p> Signup and view all the answers

Match the following scenarios to the type of product demand they represent:

<p>A clothing company raises the price of a coat from $100 to $120 = Elastic demand The price of beef increases dramatically and demand goes down as people substitute chicken or pork = Elastic demand The price of a life-saving medication increases, but patients continue to buy it because they need it = Inelastic demand A luxury car company raises its prices but sees no significant decrease in sales = Inelastic demand</p> Signup and view all the answers

Match the following terms to their definitions in the context of price and demand:

<p>Price = The amount of money that a customer must pay for a product or service Demand = The desire, ability, and willingness to buy a product or service Elasticity = The degree to which demand or supply reacts to changes in price Inelasticity = The situation in which demand or supply is not sensitive to changes in price</p> Signup and view all the answers

Match the following terms to their definitions in the context of economic theory:

<p>Elastic demand = Demand that is very sensitive to changes in price Inelastic demand = Demand that is not very sensitive to changes in price Substitutes = Goods that can be used in place of each other Price elasticity = A measure of the responsiveness of quantity demanded to a change in price</p> Signup and view all the answers

Match the following terms to their definitions in the context of marketing and pricing:

<p>Price elasticity = A measure of how much the quantity demanded of a good responds to a change in the price of that good Elastic product = A product for which a change in price leads to a substantial change in the quantity demanded Inelastic product = A product for which a change in price leads to a small change in the quantity demanded Substitute goods = Goods that can be used interchangeably, so an increase in the price of one leads to an increase in demand for the other</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Price elasticity of demand = The ratio of the percentage change in quantity demanded to the percentage change in price Coefficient of price elasticity of demand = The percentage change in demand for a commodity due to a given percentage change in the price Veblen goods = Goods which have elasticity greater than 0, consumers buy more if the price is higher Giffen goods = Goods which have elasticity greater than 0, consumers buy more if the price is higher</p> Signup and view all the answers

Match the following terms with their formulas:

<p>Initial price of the good demanded = $P$ Change in price = $\Delta P$ Initial quantity of the good demanded = $Q$ Change in quantity = $\Delta Q$</p> Signup and view all the answers

Match the following percentage changes with their corresponding values:

<p>Fall in quantity demanded = 10% Rise in price = 5% Elasticity = -2 Price increase = $5</p> Signup and view all the answers

Match the following terms with their descriptions:

<p>Elastic demand = A good is said to have this when its elasticity is greater than 1 Inelastic demand = A good is said to have this when its elasticity is less than 1 Law of demand = Quantity demanded falls when price rises Elasticity of two = Refers to an elasticity of -2</p> Signup and view all the answers

Match the following terms with their corresponding explanations:

<p>Negative price elasticity of demand = The usual state because quantity demanded falls when price rises Rare classes of goods = Veblen and Giffen goods Price elasticity of demand in absolute value terms = Often referred to as a positive value Common source of confusion for students = Economists leaving off the word 'negative' or the minus sign when referring to the price elasticity of demand</p> Signup and view all the answers

Match the following scenarios with their resulting elasticity:

<p>Quantity demanded falls 20 tons from an initial 200 tons after the price rises $5 from an initial price of $100 = Elasticity is -2 Quantity demanded falls 10% and the price has risen 5% = Elasticity is -2 Price rises $5 from an initial price of $100 and the quantity demanded has fallen 10% = Elasticity is -2 The price has risen 5% and the quantity demanded has fallen 20 tons from an initial 200 tons = Elasticity is -2</p> Signup and view all the answers

Match the following goods with their price elasticity of demand:

<p>Yachts = Elasticity of two, meaning the elasticity is -2 Veblen goods = Elasticity greater than 0 Giffen goods = Elasticity greater than 0 Majority of goods and services = Negative price elasticity of demand</p> Signup and view all the answers

Match the following terms with their descriptions:

<p>Price elasticity of demand = Percentage change in demand for a commodity due to a given percentage change in the price Veblen goods = Consumers buy more if the price is higher Giffen goods = Consumers buy more if the price is higher Elastic demand = Elasticity greater than 1</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Price elasticity of demand = The ratio of the percentage change in quantity demanded to the percentage change in price Coefficient of price elasticity of demand = The percentage change in demand for a commodity due to a given percentage change in the price Veblen goods = Goods which have elasticity greater than 0, consumers buy more if the price is higher Giffen goods = Goods which have elasticity greater than 0, consumers buy more if the price is higher</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Price elasticity of demand = Variation in demand in response to a variation in price Veblen goods = Goods which have elasticity greater than 0 Elastic demand = A good is said to have elastic demand if its elasticity is greater than 1 Inelastic demand = A good is said to have inelastic demand if its elasticity is less than 1</p> Signup and view all the answers

Match the following terms with their corresponding formulas or representations:

<p>Initial price of the good demanded = $P$ How much the price of the good changed = $\Delta P$ Initial quantity of the good demanded = $Q$ How much the quantity demanded changed = $\Delta Q$</p> Signup and view all the answers

Match the following terms with their meanings in the context of price elasticity of demand:

<p>Percentage change in demand = Change in demand for a commodity due to a given percentage change in the price Negative price elasticity of demand = Quantity demanded falls when price rises Absolute value of price elasticity of demand = Price elasticity of demand as a positive value Giffen goods = Goods which have elasticity greater than 0</p> Signup and view all the answers

Match the following terms with their descriptions in the context of price elasticity:

<p>Elasticity of two = The price elasticity demand is -2 Price rise = Increase in the price of a commodity Quantity demanded falls = Reduction in the demand of a commodity due to price rise Yachts = An example of a good with an elasticity of two</p> Signup and view all the answers

Match the following percentage changes with their corresponding effects:

<p>20 tons fall from initial 200 tons = 10% fall in quantity demanded $5 rise from initial price of $100 = 5% rise in price Elasticity of (-10%)/(+5%) = -2 Elasticity greater than 0 = Consumers buy more if the price is higher</p> Signup and view all the answers

Match the following terms with their definitions in the context of price elasticity of demand:

<p>Price elasticity of demand = The ratio of the percentage change in quantity demanded to the percentage change in price Law of demand = Quantity demanded falls when price rises Inelastic demand = When the elasticity of a good is less than 1 Elastic demand = When the elasticity of a good is greater than 1</p> Signup and view all the answers

Match the following terms with their definitions in the context of price changes:

<p>Price rise = An increase in the price of a commodity Quantity demanded = The amount of a good that buyers are willing and able to purchase Price elasticity of demand = A measure of the responsiveness of quantity demanded to a change in price Elasticity = A measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants</p> Signup and view all the answers

Match the following terms to their corresponding examples:

<p>Price elasticity of demand = If the quantity demanded falls 20 tons from an initial 200 tons after the price rises $5 from an initial price of $100 Negative price elasticity of demand = Quantity demanded falls when price rises Veblen goods = Goods which have elasticity greater than 0, consumers buy more if the price is higher Elastic demand = Yachts have an elasticity of two, meaning the elasticity is -2</p> Signup and view all the answers

Match the following terms with their meanings in the context of price elasticity of demand:

<p>Percentage change in price = How much the price of a good changed as a percentage of the initial price Percentage change in quantity demanded = How much the quantity demanded of a good changed as a percentage of the initial quantity demanded Price elasticity of demand = The ratio of the percentage change in quantity demanded to the percentage change in price Elastic demand = A situation where the elasticity of a good is greater than 1</p> Signup and view all the answers

Match the following terms with their definitions in the context of price elasticity:

<p>Price Elasticity = Shows how responsive customer demand is for a product based on its price Elastic = Sensitive to fluctuations in price Inelastic = Largely ambivalent about price changes Substitutes = Alternative products or services that can be used in place of another</p> Signup and view all the answers

Match the examples with the type of price sensitivity:

<p>Entertainment services = Elastic Beef = Elastic Luxury goods = Inelastic Staple food items = Inelastic</p> Signup and view all the answers

Match the following terms with their definitions in the context of price changes:

<p>Price Increase = A rise in the cost of a product or service Price Decrease = A reduction in the cost of a product or service Demand = The desire of consumers to purchase a product or service Supply = The total amount of a product or service available for purchase</p> Signup and view all the answers

Match the following scenarios with the expected consumer response:

<p>The price of a luxury car increases significantly = Demand decreases The price of a basic necessity like rice decreases slightly = Demand remains relatively stable The price of a popular brand of jeans decreases = Demand increases The price of a generic brand of jeans increases = Demand decreases</p> Signup and view all the answers

Match the following terms with their definitions in the context of marketing and pricing:

<p>Pricing = Determining the amount a customer pays for a product or service Marketing = Promoting and selling products or services Price Elasticity = A measure of the responsiveness of demand to changes in price Demand = The quantity of a product or service that consumers are willing and able to purchase</p> Signup and view all the answers

Match the following terms with their definitions in the context of price elasticity:

<p>Elastic Demand = Demand that is very sensitive to a change in price Inelastic Demand = Demand that is not very sensitive to a change in price Unit Elastic Demand = When the percentage change in quantity demanded is the same as the percentage change in price Perfectly Inelastic Demand = When the quantity demanded does not change as price changes</p> Signup and view all the answers

Match the following terms with their definitions in the context of price elasticity:

<p>Substitute Goods = Goods that can be used in place of one another Complementary Goods = Goods that are used together Normal Goods = Goods for which demand increases as income increases Inferior Goods = Goods for which demand decreases as income increases</p> Signup and view all the answers

Match the following terms to their definitions in the context of price elasticity:

<p>Price elasticity of demand = A measure of how sensitive the quantity demanded is to its price Elastic demand = A situation where the elasticity is greater than one Inelastic demand = A situation where the elasticity is less than one in absolute value Veblen and Giffen goods = Two classes of goods which have positive elasticity, rare exceptions to the law of demand</p> Signup and view all the answers

Match the following terms to their definitions in the context of marketing and pricing:

<p>In-market A/B test = A method to test product demand at different price points in the actual market Price point = The price at which a product is sold in the market Consumer response = The reaction of consumers to changes in price Consumer behavior = The study of consumers and the processes they use to choose, use (consume), and dispose of products and services</p> Signup and view all the answers

Match the following terms to their definitions in the context of economic theory:

<p>Revenue = The total amount of money a firm receives by selling goods or services Quantity demanded = The total amount of goods or services that are demanded at any given point in time Price rise = An increase in the price of a particular good or service Test markets = Geographical regions where a firm tests a new product or service</p> Signup and view all the answers

Match the following terms to their definitions in the context of price changes:

<p>Price elasticity = A measure of the responsiveness of the quantity demanded to a change in price Quantitative testing = A method of gathering data in numerical form Qualitative research = A method of gathering non-numerical data Incidence of a tax = The analysis of the effect of a particular tax on the distribution of economic welfare</p> Signup and view all the answers

Match the following terms to their definitions in the context of consumer behavior:

<p>Willingness to pay = The maximum amount a consumer is willing to give up in exchange for a good or service Survey responses = The answers given by respondents to a survey Market tests = Experiments conducted in a market to test responses to variations in marketing mix elements Consumer income changes = Variations in the amount of money that consumers have available to spend</p> Signup and view all the answers

Match the following terms to their definitions in the context of digital marketing:

<p>Digital context = The online environment where marketing takes place Product up at $10 = A scenario where a product is priced at $10 in an A/B test Change it to $2 = A scenario where the price of a product is reduced to $2 in an A/B test Consumer response = The reaction of consumers to changes in price in the digital context</p> Signup and view all the answers

Match the following terms to their definitions in the context of price elasticity of demand:

<p>Price rise = An increase in the price of a good or service Quantity demanded falls = A situation where the demand for a good or service decreases as a result of a price rise Elasticity is −2 = A situation where a one percent price rise leads to a two percent decline in quantity demanded Elasticity of 0 = A situation where consumption does not change at all, in spite of any price increases</p> Signup and view all the answers

Match the following descriptions with their corresponding elasticity zones:

<p>A product is perceived as a commodity by consumers = Highly elastic A product has unique and sustainable value for customers = Relatively inelastic Consumer demand changes significantly with price changes = Highly elastic Consumer demand doesn't change significantly with price changes = Relatively inelastic</p> Signup and view all the answers

Match the following factors with their impact on price elasticity:

<p>The type of product you’re selling = Can affect the elasticity The income of your target consumers = Can affect the elasticity The health of the economy = Can affect the elasticity What your competitors are doing = Can affect the elasticity</p> Signup and view all the answers

Match the following concepts with their descriptions:

<p>Elasticity = A quantitative concept to measure the sensitivity of demand to price changes Sensitivity = A qualitative concept related to how demand responds to price changes Price Elasticity of Demand = A measure of how much the quantity demanded of a good responds to a change in the price of that good Absolute value of elasticity = It’s the magnitude of distance from zero that matters in price elasticity</p> Signup and view all the answers

Match the terms with their descriptions in the context of price elasticity:

<p>Percentage decrease in demand = The change in quantity sold due to a price change Price Elasticity of Demand = A measure of how much the quantity demanded of a good responds to a change in the price of that good Elastic = Describes a product or service's demand that is very responsive to price changes Inelastic = Describes a product or service's demand that is not very responsive to price changes</p> Signup and view all the answers

Match the following phrases with their corresponding meanings in the context of price elasticity:

<p>The higher the absolute value of the number, the more sensitive customers are to price changes = High elasticity The actual number is less important than knowing which zone your product falls within = Importance of understanding the relation between product and price elasticity Your product may become more elastic if a competitor starts offering compelling substitutes = Elasticity can increase due to competition It’s an important metric to watch because your product may become more elastic if consumers’ incomes go down = Elasticity can increase due to changes in consumer income</p> Signup and view all the answers

Match the following terms with their definitions in the context of price elasticity:

<p>Elasticity = A measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants Price Elasticity of Demand = A measure of how much the quantity demanded of a good responds to a change in the price of that good Inelastic = Describes a product or service's demand that is not very responsive to price changes Elastic = Describes a product or service's demand that is very responsive to price changes</p> Signup and view all the answers

Match the following statements with their corresponding interpretations in the context of price elasticity:

<p>If my product is highly elastic, it is being perceived as a commodity by consumers = The product lacks differentiation A marketer’s goal is to move his or her products from relatively elastic to relatively inelastic = Marketers aim for their products to have unique and sustainable value Your product may become more elastic if a competitor starts offering compelling substitutes = Competition can increase a product's price elasticity Your product may become more elastic if consumers’ incomes go down = Changes in consumer income can increase a product's price elasticity</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Price elasticity of demand = The ratio of the percentage change in quantity demanded to the percentage change in price of a particular commodity Veblen goods = Goods which have elasticity greater than 0, meaning consumers buy more if the price is higher Giffen goods = Goods which have elasticity greater than 0, meaning consumers buy more if the price is higher Elastic demand = A good is said to have elastic demand if its elasticity is greater than 1</p> Signup and view all the answers

Match the following formulas with their corresponding terms:

<p>$\frac{-% \Delta Q}{% \Delta P}$ = Price elasticity of demand $\frac{-10%}{+5%}$ = Elasticity calculation example $\Delta P$ = Change in price $\Delta Q$ = Change in quantity</p> Signup and view all the answers

Match the following percentages with their corresponding terms:

<p>$-10%$ = Percentage change in quantity demanded in the example $+5%$ = Percentage change in price in the example $&gt; 1$ = Elastic demand $&lt; 1$ = Inelastic demand</p> Signup and view all the answers

Match the following terms with their descriptions:

<p>Price elasticity of demand = Normally negative because quantity demanded falls when price rises Veblen goods = Rare class of goods with positive price elasticity of demand Giffen goods = Rare class of goods with positive price elasticity of demand Elastic demand = When a good's demand changes significantly with changes in price</p> Signup and view all the answers

Match the following terms with their characteristics:

<p>Price elasticity of demand = Usually negative, but can be positive for Veblen and Giffen goods Veblen goods = Goods where an increase in price can lead to an increase in demand Giffen goods = Goods where an increase in price can lead to an increase in demand Elastic demand = Characteristic of goods where the quantity demanded changes more than proportionally to a change in price</p> Signup and view all the answers

Match the following terms with their corresponding quantities:

<p>Price elasticity of demand = Change in demand for a commodity due to a given change in the price $P$ = Initial price of the good demanded $\Delta P$ = How much the price changed $\Delta Q$ = How much the quantity demanded changed</p> Signup and view all the answers

Match the following terms with their corresponding definitions:

<p>Law of demand = Quantity demanded falls when price rises Elastic demand = A good's demand changes significantly with changes in price Inelastic demand = A good's demand changes less than proportionally with changes in price Elasticity = Measure of how much one economic variable responds to changes in another economic variable</p> Signup and view all the answers

Match the following terms with their corresponding explanations:

<p>Elasticity of -2 = Quantity demanded falls 10% and the price rises 5% Veblen goods = Goods that defy the law of demand Giffen goods = Goods that defy the law of demand Elastic demand = When the percentage change in quantity demanded is greater than the percentage change in price</p> Signup and view all the answers

Match the following terms with their corresponding examples:

<p>Price elasticity of demand = If the quantity demanded falls 20 tons from an initial 200 tons after the price rises $5 from an initial price of $100 Elasticity of -2 = Quantity demanded has fallen 10% and the price has risen 5% Yachts = Have an elasticity of two Elastic demand = When a 1% decrease in price leads to more than a 1% increase in quantity demanded</p> Signup and view all the answers

Flashcards are hidden until you start studying

Related Documents

Blocks 1,2,3,4 (1).docx

More Like This

Elastisitas dan Pasar dalam Ekonomi
10 questions

Elastisitas dan Pasar dalam Ekonomi

CrisperSurrealism5334 avatar
CrisperSurrealism5334
Use Quizgecko on...
Browser
Open
Browser
Browser