Week 3 Flashcards
What is the problem with estimating elasticity?
Difficult to estimate, requires large amounts of time, effort, and money. No reliable way to predict consumer reactions.
What can help identify consumer reaction to changes in price?
Test marketing or soft launches.
List four heavily taxed products.
- Alcohol
- Tobacco
- Cannabis
- Gasoline
Why do sales of heavily taxed products hold up well after tax increases?
These products are inelastic.
How would an increase in Canadian families’ incomes affect the demand curve for vacation packages?
Demand curve would shift to the right.
How would a sharp increase in the price of electricity affect the demand curve for electricity heaters?
Demand curve would likely shift to the left.
What is the effect of a significant increase in the price of chicken on the demand curve for fish or beef?
Demand for fish or beef would likely increase.
How are ticket sales for the Canadian Open contingent?
Based on the confirmed field of players.
Define the purpose of economists.
To study and analyze the economy and its components.
What are the two distinct types of industries in market structure?
- Competitive Industries
- Concentrated Industries
Characteristics of Competitive Industries include:
- Large number of small firms
- Easy entry and exit
- Strong competition
Characteristics of Concentrated Industries include:
- Few large firms dominate
- Difficult entry for new firms
- More capital needed
What are Price-Makers?
Sellers who can influence the supply and price of their product.
What are Price-Takers?
Sellers in competitive markets unable to control prices.
What happens to quantity supplied in a competitive industry when prices increase?
Quantity supplied increases.
List causes of increased supply.
- Increased efficiency
- Improved technology
- Increased competition
- Government subsidies
List causes of decreased supply.
- Reductions in efficiency
- Increased production costs
- Reduced competition
- Government regulation
What is inelastic supply?
Rising prices do not cause significant increases in quantity supplied.
What is elastic supply?
An increase in price causes a large increase in quantity supplied.
What is perfectly inelastic supply?
No increase in quantity supplied despite large price increases.
What is the Equilibrium Price?
The price at which supply neither increases nor decreases.
What is the Equilibrium Quantity?
The quantity sold or purchased at the Equilibrium Price.
What does the term ‘Relevant Range’ refer to?
A price acceptable for any business to charge for its goods or services.
