Managerial Economics 3

38問 • 1年前

問題一覧

_____ refers to responsiveness.

Elasticity

______ is a measure of the degree of responsiveness of quantity demanded of a product to a given change in one of the independent variables.

Demand elasticity

3 types of Demand Elasticity

Price elasticity of demand Income elasticity of demand Cross elasticity of demand

_______ is the responsiveness of consumers’ demand to change in the price of the goods sold.

Price elasticity of demand

_______ is the responsiveness of consumers’ demand to a change in their income.

Income elasticity of demand

______ is the responsiveness of consumers’ demand for a particular good in relation to changes in the price of other related goods.

Cross elasticity of demand

_____ is the percentage change in quantity demanded caused by a 1% change in price.

Price elasticity

Price Elasticity

Qe = ∆ Quantity Demanded/ ∆ Price Where : ∆ - signifies an absolute change

Interpretation of the Elasticity Coefficient

Elastic Inelastic Unitary

Extreme Types of Demand Elasticity

Perfectly Elastic Perfectly Inelastic

Demand for a product is ______ if consumers will only pay a certain price for a commodity.

elastic

This means that buyers are sensitive to price changes.

elastic

The absolute value of the coefficient of elasticity is greater than 1.

elastic

If the price of LPG increases by 10% and as a result, the quantity demanded goes down by 12%, then we say that the demand for LPG is ______ because the change in demand is greater than the change in price.

elastic

Demand for a product is ______ if consumers will pay almost any price for the product.

inelastic

This means that whether the price increases/decreases, the consumers will still buy the product.

inelastic

So if you are the seller, you can easily raise prices without hurting your product's demand, knowing that the consumers will still purchase.

inelastic

For example, if your child needs antibiotics, which is prescribed by the physician, you would not wait until the price of antibiotics drops before buying it or purchase another kind of medicine for your child. Whatever the price of antibiotics, you have no option but to buy it for your child’s condition.

inelastic

Generally, these products have no close substitutes such as medicines (antibiotics), rice, vegetables, fruits, and oil, among others.

inelastic

The absolute value of the coefficient of elasticity is less than 1.

inelastic

Suppose the price of cellphone load goes up by 5% and the quantity demanded goes down by 3%, then we can say that demand for cellphone load is _____ because the change in demand is lesser than the change in price.

inelastic

Demand for a product is ______ when the change in price results in an equal change in demand.

unitary

The absolute value of the coefficient of elasticity is equal to 1.

unitary

Let us say that the price of string beans goes down by 6%. As a result, the quantity demanded goes up by 6%; also, we describe the demand for string beans as ______ elastic.

unitary

In this case, the curve will become a vertical line.

perfectly Inelastic

Demand is _______ if changes in price do not affect the quantity demanded.

perfectly inelastic

Demand is ______ when quantity demanded is infinite, even if the percentage change in price is zero.

perfectly elastic

If a firm increases its price by 1%, no one will buy from that firm. In this case, the curve will become horizontal.

perfectly elastic

pertains to the reaction or response of the sellers to price changes of commodities.

Supply elasticity

Supply is ______ if a change in price results to greater change in the quantity supplied.

elastic

This means, an increase in demand will cause only a small rise in price, but a significant increase in demand.

elastic

Supply could be _____ when there is spare capacity in the factory, and stocks are available.

elastic

Supply is _____ if a change in price results in a smaller change in quantity supplied.

inelastic

This means, an increase in demand will cause a significant rise in price, but only a slight increase in demand.

inelastic

Supply could be _____ when firms are operating close to full capacity and no surplus goods to sell.

inelastic

Supply of products is _____ when quantity supplied is the same percentage or equal to the change in price.

unitary

Supply is ______ if the quantity supplied is unlimited at a given price, but no quantity can be supplied at any other price.

perfectly elastic

Supply is ______ if changes in price do not affect the quantity supplied. An example of this would be products with limited quantities.

perfectly inelastic

Business Finance

Sab Sescon · 46問 · 2年前

Business Finance