If price elasticity of demand is elastic...

A change in price will lead to a bigger change in quanity demanded

Why do firms tend to supply MORE if prices rise (why is the supply curve upward sloping)

Variable cost per unit rise as output increases so higher prices are needed

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Price Determination

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Questions 10

Answers

1
If XED = -0.3 then...
The goods must be complements
The goods must be apples and pears
The goods must tennis balls and tennis racquets
The goods must be substitutes
2
The leather that is produced as a by-product of beef production is an example of...
Goods in Joint Demand
Goods in Joint Supply
Complementary goods
Productive efficiency
3
When price rises, the law of demand states that...
The demand curve shifts right
Demand expands
Demand contracts
The demand curve shifts left
4
If price elasticity of demand is elastic...
a change in incomes will lead to bigger change in price
A change in price will lead to a bigger change in quanity demanded
A change in price will lead to a smaller change in quantity demanded
Demand is stretchy
5
If the price is higher than equilibrium price there will be...
Poverty
Excess supply
Excess demand
Riots
6
Which of these is NOT a factor that will shift the supply curve
Changes in firms manufacturing costs
Changes in demand
Changes in productivity
Changes in the number of firms in the market
7
Why do firms tend to supply MORE if prices rise (why is the supply curve upward sloping)
Firms always want to grow bigger
Demand will be higher
Variable cost per unit rise as output increases so higher prices are needed
Taxes will be higher
8
Where is market equilibrium found
Where excess supply is maximised
Where there is equality between consumers and producers
In the middle
Where supply equals demand
9
Which of these is NOT a factor that shifts demand
Changes in Incomes
Indirect taxes
Changes in Population
Changes in the price of substitutes
10
The demand for labour is an example of
Derived demand
Competing demand
Discrimination
Positive demand

Price Determination Flashcards | StudBud