Chapter 3

Question 1

Alternative Point elasticity

Answer 1

E=B * P/Q

Question 2

Total Revenue Form 1

Answer 2

P*Q

Question 3

Total Revenue Form 2

Answer 3

aQ-bQ^2

Question 4

Marginal Revenue Formula

Answer 4

a-2bQ

Question 5

Elasticity

Answer 5

a measure of the responsiveness of one variable to changes in another variable; the percentage change in one one variable that arises due to a given percentage in another variable

Question 6

Own Price Elasticity

Answer 6

a measure of the responsiveness of the quantity demanded of a good to a change in the price of that good; the percentage change in quantity demanded divided by the percentage change in the price of the good

Question 7

Perfectly Elastic Demand

Answer 7

demand is perfectly elastic if the own price elasticity infinite in absolute value. In this case the demand curve is horizontal.

Question 8

Perfectly Inelastic Demand

Answer 8

Demand is perfectly inelastic if the own price elasticity is zero . In this case the demand curve is vertical.

Question 9

Cross Price Elasticity

Answer 9

A measure of the responsiveness of the demand for a good to changes in the price of a related good

Question 10

Income Elasticity

Answer 10

a measure of the responsiveness of the demand for a good to changes in consumer income

Question 11

Demand tends to be what in the short term relative to the long term

Answer 11

-tends to be more inelastic in the short term than in the long term

Question 12

Keys for Elasticity and Provide Examples

Answer 12

• number of substitutes
• time
• budgetary significance

Question 13

Cross Price Elasticity >0

Answer 13

substitutes

Question 14

Cross Price Elasticity<0

Answer 14

complements

Question 15

Discuss the total revenue test and where is it maximized

Answer 15

-check the book….

Question 16

Example of Perfectly Inelastic good

Answer 16

life saving cancer drugs

Question 17

Example of Elastic Good

Answer 17

generic aspirin

Question 18

Income elasticity>0

Answer 18

normal good

Question 19

Income elasticity<0

Answer 19

inferior good

Question 20

Marginal Revenue

Answer 20

change in revenue due to a change in total output

Question 21

Own Price Elasticity>1

Answer 21

elastic if greater than 1 in absolute value

Question 22

Own Price Elasticity<1

Answer 22

inelastic if less than 1 in absolute value

Question 23

Own price elasticity=1

Answer 23

unitary elastic

Question 24

Unitary elastic

Answer 24

Goods that are considered unitary in terms of elasticity are goods that result in no effect in demand even when prices change.

Read more : http://www.ehow.com/info_7792939_elastic-unitary-inelastic-elasticity.html

Question 25

Marra’s definition of revenue

Answer 25

revenue the seller receives for selling an additional unit of output

Question 26

Deadweight Loss

Answer 26

The costs to society created by market inefficiency. Mainly used in economics, deadweight loss can be applied to any deficiency caused by an inefficient allocation of resources. Price ceilings (such as price controls and rent controls), price floors (such as minimum wage and living wage laws) and taxation are all said to create deadweight losses. Deadweight loss occurs when supply and demand are not in equilibrium.

Question 27

What will own price elasticity always be?

Answer 27

negative

Question 28

Goods that comprise a relatively small portion of a consumer’s budget are

Answer 28

inelastic

Question 29

Demand is what at high prices and what at low prices

Answer 29

elastic…..and inelastic

Question 30

Elasticity Formula

Answer 30

(ΔQ x Σ(P))/(Σ(Q)x Δ(P))

Question 31

Simplified Elasticity Formula

Answer 31

E= β*P/Q

Question 32

P=

also what do we use P for

Answer 32

a-bQ

-inverse and graphing

Question 33

Q=

Answer 33

a-Bp

Question 34

Again, what does Q equal?

Answer 34

a-Bp