Micro & Macro Flashcards
One should produce additional units when the…
Marginal revenue is greater than the marginal costs.
The demand curves elasticity goes form …
Elastic at the top and inelastic at the end.
Marginal cost cuts the…
Total costs at its minimum point.
Porter’s five competitive forces:
New entrants Industry competitors Substitutes Suppliers Buyers
Product life cycle:
Introduction Growth Maturity Decline Insolence
Price elasticity of demand will always be…
Negative
PED between -1 and forever is…
Elastic. This means that demand is more than proportionally responsive to changes in price.
PED ranges from -infinity at the top end of the demand curve to…
Zero as the curve touches the quantity axis.
Cross elasticity XED helps you determine…
If another product is a substitute (positive) or a complementary (negative).
XED is positive e.g. 0.8 means that demand and
Price both rise together
Income elasticity YED: if it’s positive it means that…
The quantity demanded increase as income rises. I.e. Normal goods.
Elasticity of supply is calculated as:
% change in q sold / % change in p
Business cycle:
Expansion
Peak
Contraction
Recession
Porters four Ps:
Product
Place
Promotion
Price
