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BEC - Economics

Terms in this set (138)

Reasons for upward shift of demand curve include increase in price of substitute, consumer expectation, when income increase, when market changes.
Reasons for upward shift of demand curve include increase in price of substitute, consumer expectation, when income increase, when market changes.
Reasons for downward shift of demand curve include increase in price of complement, decrease in income, and boycott.
Reasons for downward shift of demand curve include increase in price of complement, decrease in income, and boycott.
Price elasticity of demand, or E.D. measures how responsive quantity demanded is to a change in price. There are 2 ways to calculate it.
Price elasticity of demand, or E.D. measures how responsive quantity demanded is to a change in price. There are 2 ways to calculate it.
The first way to calculate price elasticity is percentage change in quantity demanded divided by percentage change in price.
The first way to calculate price elasticity is percentage change in quantity demanded divided by percentage change in price.
The second way to calculate price elasticity is change in quantity demanded divided by average quantity demanded divided by change in price divided by average price. This is called the arc method.
The second way to calculate price elasticity is change in quantity demanded divided by average quantity demanded divided by change in price divided by average price. This is called the arc method.
If price elasticity of demand is equals to 1, it means revenue is not sensitive to price change. If it is less than 1, demand is inelastic and total revenue will increase if price is increased. If it is less than 1, revenue will decline if price increases.
If price elasticity of demand is equals to 1, it means revenue is not sensitive to price change. If it is less than 1, demand is inelastic and total revenue will increase if price is increased. If it is less than 1, revenue will decline if price increases.
Price elasticity of supply is calculated the same as price elasticity of demand, except with supply.
Price elasticity of supply is calculated the same as price elasticity of demand, except with supply.
Income elasticity of demand measures effect of changes in consumer income on changes in quantity demanded.
Income elasticity of demand measures effect of changes in consumer income on changes in quantity demanded.
Income elasticity of demand is calculated as percentage change in quantity demanded divided by percentage change in income.
Income elasticity of demand is calculated as percentage change in quantity demanded divided by percentage change in income.
A positive income elasticity of demand means the good is a normal good. A negative elasticity means the good is an inferior good.
A positive income elasticity of demand means the good is a normal good. A negative elasticity means the good is an inferior good.
Cross-elasticity of demand measures the change in quantity demanded of a good to a change in price of another good and is used to determine if two different goods are substituted or complements.
Cross-elasticity of demand measures the change in quantity demanded of a good to a change in price of another good and is used to determine if two different goods are substituted or complements.
Cross elasticity of demand is calculated by taking the percentage change in the quantity demanded for product X and percentage change in the price of product Y.
Cross elasticity of demand is calculated by taking the percentage change in the quantity demanded for product X and percentage change in the price of product Y.
Right shift of the supply curve can be caused by number of producers, government subsidies, price expectations, and technological advances.
Right shift of the supply curve can be caused by number of producers, government subsidies, price expectations, and technological advances.
Left shift of the supply curve can be caused by increase in production costs and prices of other products.
Left shift of the supply curve can be caused by increase in production costs and prices of other products.
Economic rent is the excess of the payments they are receiving over the normal profit rate.
Economic rent is the excess of the payments they are receiving over the normal profit rate.
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