Week 9_ Unit 8 Part 1 SUPPLY AND DEMAND: PRICE-TAKING AND COMPETITIVE MARKETS Flashcards
1
Q
Why might reservation price change?
A
Due to differing opportunity costs and substitutes in the market
2
Q
How to determine elasticity from demand curve?
A
Flatter the demand curve= more elastic
Steeper the demand curve= less elastic
if demand curve is flat= perfectly elastic
if demand curve is horizontal= same elasticity
3
Q
What criteria do consumers use to make a buying decision in each market?
A
1) price= where only price is the factor (e.g. buying fruit)
2) non price= e.g. features of the product in comparison (comparing mobile phones)
4
Q
When demand curve shifts to right?
A
Demand increases
Price increases
Quantity increases
5
Q
When supply curve shifts down
A
More supply
Lower Price
Higher Quantity
