Podcast
Questions and Answers
How does a reduction in the price of Samsung Galaxy phones typically affect the market for iPhones, assuming they are substitute goods?
How does a reduction in the price of Samsung Galaxy phones typically affect the market for iPhones, assuming they are substitute goods?
- The demand curve for iPhones shifts to the left, decreasing both equilibrium price and quantity. (correct)
- The supply curve for iPhones shifts to the left, increasing the equilibrium price and decreasing the equilibrium quantity.
- The supply curve for iPhones shifts to the right, decreasing the equilibrium price and increasing the equilibrium quantity.
- The demand curve for iPhones shifts to the right, increasing both equilibrium price and quantity.
What is the likely effect on the equilibrium price and quantity of butter if both the price of margarine rises and a tax is imposed on butter production?
What is the likely effect on the equilibrium price and quantity of butter if both the price of margarine rises and a tax is imposed on butter production?
- Equilibrium price increases, equilibrium quantity decreases.
- Equilibrium price increases, equilibrium quantity is indeterminate. (correct)
- Equilibrium price decreases, equilibrium quantity increases.
- Equilibrium price is indeterminate, equilibrium quantity increases.
Which of the following is the correct formula for calculating the price elasticity of demand (Ped) using the midpoint method?
Which of the following is the correct formula for calculating the price elasticity of demand (Ped) using the midpoint method?
- Ped = (Change in quantity demanded) / (Change in price)
- Ped = (Change in price) / (Original price)
- Ped = (Percentage change in price) / (Percentage change in quantity demanded)
- Ped = ((Q2 - Q1) / ((Q2 + Q1)/2)) / ((P2 - P1) / ((P2 + P1)/2)) (correct)
Given a price decrease from £15 to £12 and a corresponding increase in quantity demanded from 10 to 32 units, what is the price elasticity of demand (Ped) using the midpoint method, and what does it imply for a business's pricing strategy?
Given a price decrease from £15 to £12 and a corresponding increase in quantity demanded from 10 to 32 units, what is the price elasticity of demand (Ped) using the midpoint method, and what does it imply for a business's pricing strategy?
Which of the following concepts best explains why the demand curve typically slopes downwards?
Which of the following concepts best explains why the demand curve typically slopes downwards?
In a competitive market, what condition leads to a surplus and what condition leads to a shortage?
In a competitive market, what condition leads to a surplus and what condition leads to a shortage?
If a 15% increase in income leads to an increase in quantity demanded from 18 units per week to 24 units per week, what is the income elasticity of demand?
If a 15% increase in income leads to an increase in quantity demanded from 18 units per week to 24 units per week, what is the income elasticity of demand?
What does it mean for a good to have inelastic demand?
What does it mean for a good to have inelastic demand?
Flashcards
Equilibrium
Equilibrium
The price and quantity where supply and demand intersect, creating market balance.
Demand Shifters
Demand Shifters
Factors like consumer preferences, income, and prices of related goods that influence the quantity of a product or service consumers are willing and able to purchase.
Supply Shifters
Supply Shifters
Factors like input costs, technology, and expectations that can alter the quantity of a product or service suppliers offer.
Price Elasticity of Demand (Ped)
Price Elasticity of Demand (Ped)
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Shortage
Shortage
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Surplus
Surplus
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Income Effect
Income Effect
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Substitution Effect
Substitution Effect
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Study Notes
- Workshop 3 focuses on equilibrium, price, and elasticity
- It explores factors causing shifts in demand and supply
- It investigates the effects when demand and supply shift
iPhone Market Effects
- Examine effects on the iPhone market using supply and demand diagrams
Samsung Galaxy Price Reduction
- A reduction in the price of the Samsung Galaxy
New iPhone Advertising Campaign
- Launching a new advertising campaign with popular celebrities
Improved iPhone Production Technology
- Improvements in the technology used to produce iPhones
Increase in Personal Tax Allowance
- The Chancellor of Exchequer announces an increase in personal tax allowance
Apple's Decision to Increase iPhone Price
- Management decides to increase the price of iPhones
Butter Market Equilibrium
- Determine what happens to equilibrium price and the quantity of butter
Rise in Price of Margarine
- Rise in the price of margarine
Rise in the Price of Bread
- Rise in the price of bread
Rise in the Demand for Bread
- Rise in the demand for bread
Expected Increase in Future Butter Price
- Expectations about increase in the price of butter in the near future
Tax on Butter Production
- Introduce a tax on butter production
New Cholesterol Removal Process
- New expensive process for removing all cholesterol
- Law requires all butter producers to use this process
Price Elasticity of Demand (Ped)
- Provide definition and formula for price elasticity of demand (Ped)
Calculating Ped
- Product price declines from £15 to £12
- Quantity demanded rises from 10 units to 32 units
- Calculate Ped using mid-point method
- Provide interpretations and implications for pricing strategies
Demand Curve
- Explain which factor(s) causes the demand curve slopes downwards
Market Equilibrium
- Determine whether the market will experience a shortage or a surplus, based on whether prices are below or above equilibrium
Demand Elasticity
- A 15% increase in income leads to an increase in quantity demanded from 18 units per week to 24 units per week
- Determine the income elasticity of demand
Inelastic Demand
- Define what inelastic demand for a good means
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Description
Explore market equilibrium, price elasticity, and factors shifting supply and demand. Examine the iPhone and butter markets, analyzing the impact of price changes, advertising, technology, and tax policies on equilibrium.
