ECON 201 Final Exam 2022
impact on quantity demanded of an elastic good when price changes slightly - quantity demanded changes even more than price because of the availability of substitutes (ex: wheat, coke/pepsi)
...
ECON 201 Final Exam 2022
impact on quantity demanded of an elastic good when price changes slightly - quantity demanded changes even more than price because of the availability of substitutes (ex: wheat, coke/pepsi)
quantity demanded changes less than price because consumers need the product (ex: gas) - impact on quantity demanded of an inelastic good when price changes slightly
potential for profit has what impact on competition? - creates more competition by drawing new firms toward the industry
losses impact competition in what way? - creates less competition as firms leave the industry in pursuit of more profitable enterprises
potential for profit attracts new firms to the industry and thus... - supply increases, driving price down and thus reducing profitability
losses chase firms out of the industry and thus... - supply decreases, causing prices to rise and losses to disappear
what is the impact of the "invisible hand" - pushes resources towards their most profitable use
when profit is present in an industry, the invisible hand... - causes new businesses to enter that industry, causing price to fall, and the profitability to decrease
when losses are present in an industry, the invisible hand... - causes businesses to leave for more profitable industries, leading to a rise in price as a result of decreased supply, making businesses that remain more profitable
the zero profit theorem suggests that when the cycle of resources from one industry to another ceases... - equilibrium is reached
[Show More]