D089 Module 3 Supply, Demand, and Elasticity Exam -Solved

Supply - ANSWER-A fundamental economic concept that describes the total amount of a specific good or service that is available to consumers Demand - ANSWER-Consumer's willingness and ability to consume a given good. Elasticity - ANSWER-An economics concept that measures responsiveness of one variable to changes in another variable What happens when demand is inelastic (price elasticity less than one) - ANSWER-Price and total revenue move in the same direction What happens when demand is unit elastic (price elasticity equal exactly one) - ANSWER-Total revenue remains constant when the price changes What happens when demand is elastic (price elasticity greater than one) - ANSWER-Price and total revenue move in opposite directions Total Revenue (TR) - ANSWER-Price x Quantity The income that a company receives from its normal business activities, usually from goods and services; Impacts on Elasticity of Supply - ANSWER-- Number of producers - Availability of resources - Technology - Flexibility - Time Narrowly defined markets - ANSWER-more elastic demand and substitutes Broadly defined markets - ANSWER-fairly inelastic and have no good substitutes Law of Demand - ANSWER-The common relationship that a higher price leads to a lower quantity demanded of a certain good or service and a lower price leads to a higher quantity demanded while all other variables are held constant increase in demand - ANSWER-This rightward shift of the curve is called an increase in demand, or a change in demand.