5.3 Flashcards
What do businesses try to do to increase profits?
Businesses try to lower costs to increase profits.
How do price changes in key inputs affect supply and demand?
Price changes in key inputs affect supply and demand.
What happens to prices with cost savings from tech improvements in inelastic demand?
Inelastic demand leads to lower prices.
What happens to prices with cost savings from tech improvements in elastic demand?
Elastic demand leads to a small price drop.
What happens to prices with higher costs in inelastic demand?
Inelastic demand leads to higher prices with little quantity drop.
What happens to quantity purchased with higher costs in elastic demand?
Elastic demand leads to lower quantity purchased.
What does more inelastic demand mean for tax burden?
More inelastic demand means consumers bear most of the tax burden.
What does more inelastic supply mean for tax burden?
More inelastic supply means producers bear most of the tax burden.
How do prices fluctuate in the short run?
In the short run, prices fluctuate more.
How do quantities change in the long run?
In the long run, quantities change more.
