Micro Econ

Elasticity Of Demand

%change in Q^d / % change in P

Mid Point Method

(End value-start value/midpoint) x 100%

If two goods are substitutes, their cross-price elasticity will be

Positive

A key determinant of the price elasticity of supply is the time period under consideration.

The number of firms in a market tends to be more variable over long periods of time than over short periods of time.

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

maximizes the combined welfare of buyers and sellers

Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect...

most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government.

Total surplus is

the total value of the good to buyers minus the cost to sellers of providing the good.

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then

wheat farmers would experience an increase in their total revenue.