Last Modified: 2011-07-07
Related Textbooks:Principles of Microeconomics
*do not take abs value!!
otherwise: (Change in Q/avg Q)/ (change in P/avg P)
TAKE ABS VALUE
2. where the good is a necessity or a luxury--> PED higher for luxury
3. share of income spent on good--> PED = higher for goods that compose most of your income
4.time--> PED is higher in the long run than the short
2. times: supply = inelastic in short run
*when comparing the supply and demand curves, the more inelastic curve is where the burden of tax falls.
1. lower PED = more consumers pay
2. lower PES = more suppliers pay
*way to regulate what is purchased in the states
*Q changes less with inelastic curves
2. payroll= depends on earnings
3. depends on value of goods sold (aka: consumption taxes)
4. profits = depends on a firms profits
5. property = depends on a property value
6. capital gains tax= depends on appreciation of asset when sold
7. estate = depends on value of state bequeathed
(increases with progressive and decreases with regressive)
= explicit + implicit
*includes forgone costs of labor and capital
they tink of the alt. uses of labor and capital
*can be calculated from willingness to pay.
2. MB is higher or equal to MC
*represents the marginal benefit to consumers
*tells us inputs necessary to produce a given level of output
MC= delta TC/delta Q
*price is taken as given
*price is taken as given
*usually consumers though
*producers each have a sm. market/share of total output
*free entry/exit: no obstacles due to govt. regulations (licenses) or limited access to key resources
*produce as long as P is = or > than MC
*If P< min ATC, firm covers variable costs but not all fixed costs.
*If P>min ATC, firm covers all variable and fixed costs.
2. if firms have same ost structure, all firms make zero economic profits in long run bc of entry and exit
3. market = flexible in that all mutually agreeable transactions will take place.
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