income, fashion) b = slope of the demand curve; P = Price of the good. a decrease along the quantity axis) and increases in demand as shifts to the right of the demand curve (i.e. If – given consumer preferences – a certain good has many close substitutes available, then: Question: if the demand curve for a product is vertical, any tax increase on the product … Shifting the Curve . 2. Given I = 50, the demand curve becomes Q = 300 — 2P + 4(50), or Q = 500 — 2P. only when the firm is a "price taker." At a price of $20, 10 units of a product are sold. Question 11. Is the demand curve shallow or steep? Setting demand equal to supply we can solve for P and then Q: 500 - 2P = - 50 Q = 280. demand equal to supply we can solve for P and then Q: 400 - 2P = - 50 p = 90 Q = 220. If a demand curve is VERTICAL, then own-price elasticity of demand for this good is equal to: a) Infinity. B) shift the demand curve for the product to the right. Marshall through the curve like this and then put the demand curve on there, even though the mathematical form looks like this, he put it on the axes that are inverse. Then, what does it mean when the demand curve is vertical? If the price is increased to $40, then one would expect sales to equal: 20 units If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to: fall and the equilibrium quantity to stay the same. If a unit tax is imposed in the market for this product, A. buyers bear the entire burden of the tax. c) One. We just call it demand curve. If a demand curve is VERTICAL, then own-price elasticity of demand for this good is equal to: Question. The demand for a product is unit elastic. 5) The change in price that results from a leftward shift of the supply curve will be greater if . b) Zero. Inverse demand equation The demand curve shows the amount of goods consumers are willing to buy at each market price. C. the tax burden will be shared equally between buyers and sellers. only to purely competitive firms. Upsloping to the right Downsloping to the right Question 10. D) increase the quantity supplied of a product. 3. market. C. elasticity of demand is 0.74. B. buyers share the burden of the tax with government. If a demand curve is (Great!) If a firm finds that it can sell $13,000 worth of a product when its price is $5 per unit and $11,000 worth of it when its price is $6, then: A. the demand for the product is elastic in the $6-$5 price range. C) change the shape of the supply curve. If any determinants of demand other than the price change, the demand curve shifts. In general, it's helpful to think about decreases in demand as shifts to the left of the demand curve (i.e. The firm's demand curve is: A vertical line A horizontal line (Nice Work!) A vertical demand curve means that quantity demanded remains the same, regardless of price. Suppose the demand curve for a product is vertical and the supply curve is upward sloping. d) All of the above affect the own-price elasticity of demand. A) shift the demand curve for the product to the left. Qd = a – b(P) Q = quantity demand; a = all factors affecting price other than price (e.g. d) None of the above. A linear demand curve can be plotted using the following equation. B. the demand for the product must have increased. That means larger quantities will be demanded at every price. If I = 50, find the market clearing price and quantity for the product. If the entire curve shifts to the left, it means total demand has dropped for all price levels. If demand increases, the entire curve will move to the right. Question : The MR = MC rule applies: to firms in all types of industries. only to monopolies. So in fact, this is really the inverse demand curve but economists being lazy mathematicians never really used the word inverse. Under perfectly inelastic demand, the quantity demanded would remain the same, even when the price increases by a large amount.
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