Documents about Downward Sloping

  • 3 Pages

    Econ11Fall2007NotesForLecture_24Dec3

    GWU, ECON 011

    Excerpt: ... Lecture XXIV Notes For December 3, 2007, I. Monopolistic Competition - the Market For Style II. Contrasting Monopoly & Monopolistic Competition III. Introduction to Game Theory and Oligopoly Monopolistic Competition - the Market for Style A. Heterogeneous output and easy entry B Downward sloping demand curve for heterogeneous output customers are willing to pay a "premium" for the output for individual firms compared to competitors. C. Short run, firm looks like ordinary monopoly 1.Demand is given by D', and production is at Q' where MCL = MR'. Price = P' > ACL, = (P'-AC')Q' 2. Given > 0, new firms enter D. Long entry looks like Monopolis Ordinarius 1. Demand shifts to the right and flattens because customers "stolen" by new entrants. Entry stops when profit = 0, because demand falls to D* and P*=ACL. $/Q MCL P' P*=AC AC' ACL D' MR* Q* Q' MR' D* Q I. II. Contrast Monopoly & Monopolistic Competition A. Lesson: the form of market organization has dramatic effects on outcomes for consumers! B. Jewelry st ...

  • 5 Pages

    Lecture17

    UCLA, ECON 1

    Excerpt: ... LECTURE 17 Econ 1, Winter 2008 RATIKA NARAG, Ph.D. Type of market Perfect competition Monopolistic competition Oligopoly # of firms Very many Many / several Few Freedom of entry Unrestricted Nature of product Homogeneous (undifferentiated) Differentiated Undifferentiated Implications for demand curve faced by firm Horizontal: firm is a price taker Downward sloping , but relatively elastic Downward sloping . Relatively inelastic (shape depends on reactions of rivals) Downward sloping : more inelastic than oligopoly. Firm has considerable control over price Unrestricted Restricted or differentiated Monopoly One Restricted or completely blocked Unique LECTURE 17 Monopolistic Competition Many firms: each ignores the actions and reactions of its many competitors Free entry and exit: economic profits bring entry which takes demand away from existing firm's products Firms produce one variety of the industry's differentiated product; negatively sloped DD curve, but ...

  • 3 Pages

    ECON202 - Lecture 3

    Oregon State, ECON 202

    Excerpt: ... ECON202 Class Notes April 8, 2008; Lecture 3 1) Macroeconomics a) Federal government controls rate at which banks loan to each other i) Federal bank buy and sell bonds to private banks to take money out of circulation (1) Market determines price o ...

  • 2 Pages

    PS1_ProblemSet

    Cornell, AEM 4150

    Excerpt: ... decrease in quantity demanded of the other. Explain. (f) Give five examples of individuals supply determinants and explain the positive or negative impact they will have on the shift of supply curves. 2. You have been hired to do some consulting for the Ford Company. Specifically, they want you to advise them on how they should price their SUV in 2008. You have been given the following two years of sales and price data on their SUV to make your analysis: Year 2006 2007 Units Sold Price Per Unit 12,000 $17,500 14,000 $16,100 All demand factors/shifters such as consumer income, tastes, competitors prices, and population size are assumed to be held unchanged from 2006 to 2007. Normal ( downward sloping ) linear demand is assumed. Answer the following questions. Use the arcelasticity formula. (a) Compute the own price elasticity of demand for this SUV. (b) Based on your estimated own price elasticity of demand (again, ignore factors such as the change in income and the change in the competitors price), w ...

  • 24 Pages

    chap9

    CUNY Queens, ECON 101

    Excerpt: ... ditional unit of output. In mathematical terms: Firm facing a perfectly elastic demand curve If demand is perfectly elastic, MR = P Firm facing a downward sloping demand curve A firm facing a downward sloping demand curve must lower its price if it wishes to sell additional units of this good. MR = ? Demand and MR for a firm facing a downward sloping demand curve Profit maximization Profit = (profit per unit) x # of units = (P ATC) x Q Profit maximization Alternative market structures Perfect competition: a very large number of buyers and sellers, easy entry, a standardized product, and each buyer and seller has no control over the market price (this means that each firm is a price taker that faces a horizontal demand curve for its product). Monopoly a single seller producing a product with no close substitutes, effective barriers to entry into the market, and the firm is a price maker, also called a price searcher because it faces a downward slopi ...

  • 2 Pages

    LECTURE%20NOTES%2010

    German University in Cairo, ECON 101

    Excerpt: ... FFECT CONSUMPTION, INVESTMENT AND GOVERNMENT SPENDING. D) SOME EXOGENOUS FACTORS SUCH AS WARS AND WEATHER. AGGREGATE DEMAND AND AGGREGATE SUPPLY INTERACT TO PRODUCE EQUILIBRIUM OF THE PRICE LEVEL AND NATIONAL OUTPUT. AT THAT LEVEL OF PRICES AND NATIONAL OUTPUT, DEMANDERS WILLINGLY BUY WHAT BUSINESSES WILLINGLY SELL. THE RESULTING LEVEL OF OUTPUT DETERMINES EMPLOYMENT AND FOREIGN TRADE. Page 1 of 2 University of Modern Sciences & Arts (MSA) Dr. Heba Helmy Aggregate demand and aggregate supply/exercise ECO-101 Lecture notes 10 PRICE INDEX AD AS MACROECONOMIC EQUILIBRIUM 200 B C 150 E $3000 Q (REAL GDP) *THE DOWNWARD SLOPING CURVE IS THE AGGREGATE DEMAND CURVE (AD). IT REPRESENTS WHAT EVERYONE IN THE ECONOMY- CONSUMERS, BUSINESSES, FOREIGNERS AND GOVERNMENT- WOULD BUY AT DIFFERENT AGGREGATE PRICE LEVELS (OTHER FACTORS CONSTANT). AS THE LEVEL OF PRICES RISE, (AD) FALLS AND VICE VERSA. *THE UPWARD SLOPING CURVE IS THE AGGREGATE SUPPLY CURVE (AS). IT REPRESENTS THE QUANTITY OF G ...

  • 6 Pages

    2-6-09

    Allegheny, ECON 200

    Excerpt: ... et constraint When he asks you to draw the utility curve, it DOES NOT HAVE TO BE EXACT: Draw something downward sloping and tangent to the budget constraint. The equation that you reach after setting the slope of the budget constraint equal to the indifference curve this equation is what you use to determine the point at which the budget constraint and indifference curves are tangent to each other. The line F = 2E intersects the budget constraint at (50, 100), which is the tangent point. Draw your indifference curve tangent at that point. Problem #1 Make sure that you designate either Football and Basketball as either X or Y and keep your axes consistent (for when you plot them on the graph). The exponents in cobb-douglas utility function (only!) tell you that your percentage of income spent on each good When your exponents do NOT add to up to 1 you need a monotonic transformation to a cobbdouglas utility function that DOES have exponents that DO add up to 1: Use th ...

  • 2 Pages

    Money Demand, The Equilibrium Interest Rate, an...

    Penn State, ECON 4.3

    Excerpt: ... Econ 4.3 Monday, March 22, 1999 Announcements: Chapter 10 and Chapter 11 homeworks are due on Wednesday. Dr. Fox was out today. Lecture notes: The Supply of Money Vertical line because it is completely determined (set) by the Fed Fed changes the MS (shifts the curve) by changing the required reserve ratio, or by engaging in open market operations S o Increase (decrease) in rr -> decrease (increase) in M S o Fed buys (sells) bonds -> increase (decrease) in M Chapter 12: Money Demand, The Equilibrium Interest Rate, and Monetary Policy Chapter 12 combines money supply with demand for money The demand for money does not mean how much money you would like to have, but rather how much of your financial assets you would like to hold as cash (ie. non-interest bearing securities) Total Demand For Money Transactions Motive: The transactions motive refers to the main reason people hold money to buy things. Reasons why demand for money is downward sloping . Speculative Motive: Individuals may choose to hold ...

  • 47 Pages

    rohlf_lecture4

    CUNY Hunter, ECONOMICS 101

    Excerpt: ... Demand and Supply Fundamental to understanding of economics Study the determination of prices and quantities in markets We will look first at demand, then at supply, and then put them together 1 Determinants of demand The demand for a product depends on a number of factors First, it depends on the price of the product: Mathematically, Q1D = f(p1 .) As an example, consider the following table that relates price and quantity 2 EXHIBIT 3.1 Hometown Demand for Jogging Shoes 3 Determinants of demand Q1D = f(p1 .) We usually plot these two variables in a graph: 4 EXHIBIT 3.2 The Demand Curve for Jogging Shoes in Hometown, U.S.A. 5 Downward sloping demand Note that demand is a downward sloping function of price Why? 2 reasons Income effect Substitution effect 6 Downward sloping demand: income effect Income effect: as price falls the consumer can buy more of this good (and all goods) and thus becomes wealthier E.g. p of apples = $2; bu ...

  • 3 Pages

    Lecture 2

    Berkeley, ECON 100A

    Excerpt: ... emand is with a change in price. If an elasticity curve is flat, it means it's more elastic. If it is more vertical, it means its more inelastic. This not only depends on the slope of the curve, but also on the price and quantity. So the elasticity varies along the curve as P and Q changes. Here are two extreme cases of elasticities. In an infinitely elastic demand, the curve is horizontally flat. In a case of completely inelastic demand, the curve is vertical and it is not prone to change. Isoelastic demand is different with linear demand curve. This is a demand curve with constant price elasticity. If it's not a straight line, then what is it? It looks like a downward sloping curve (refer to slide). Income elasticity of demand is percentage change in the quantity demanded resulting from a 1-percent DO NOT 2 COPY Sharing or copying these notes is illegal and could end note taking for this course. ECONOMICS 100A ASUC Lecture Notes Online: Approved by the UC Board of Regents 1/22/09 increase in in ...

  • 25 Pages

    Lecture11

    Virginia Tech, ECON 2005

    Excerpt: ... 5 6 MU Star Fruit 12 9 6 4 3 1 MU Papaya 12 9 8 6 4 2 MU/P Star Fruit 4 3 2 1.33 1 .33 MU/P Papaya 3 2.25 2 1.5 1 .5 22 of 40 Problem 2 Where does MU/P equal for Papaya and Star Fruit? Case 1: Star Fruit =2, Papaya =1 Spend $10 Case 2: Star Fruit =3, Papaya =3 Spend $21 Case 2: Star Fruit 3 Papaya 3 Spend $21 Case 3: Star Fruit =5, Papaya =5 Spend $35 Uh Oh, there aren't any correct solutions according to our formula. Buy 1 more Papaya. 3 S.F. and 4P Spend $25. Units 1 2 3 4 5 6 MU Star Fruit MU Star Fruit 12 9 6 4 3 1 MU Papaya MU Papaya 12 9 8 6 4 2 MU/P Star MU/P Star Fruit 4 3 2 1.33 1 .33 MU/P Papaya MU/P Papaya 3 2.25 2 25 2 1.5 1 23 of 40 .5 THE BASIS OF CHOICE: UTILITY DIMINISHING MARGINAL UTILITY AND DOWNWARD-SLOPING DEMAND Diminishing Marginal Utility and Downward Sloping Downward-Sloping Demand The LDMU explains why demand curves are downward sloping . The more you consume of a good, the less you are willing to spend for an additional unit (sinc ...

  • 1 Pages

    Eco 10-31

    UT Dallas, ECO 2302

    Excerpt: ... Econ Notes 10-31 1. Price Searching a. Assume firms are facing a downward sloping demand curve. b. Why? i. People are ignorant 1. They may not be aware of all the alternatives available to them ii. Firms may have advantages over other firms 1. For Exmp: Location iii. Products may be slightly different 1. Or Greatly different iv. Seller may be a monopolist c. In this case, firms are not price-takers, they are price searchers i. They don't take the price as given, they are looking to find the best rice for them to charge d. Marginal Revenue i. The change in total revenue based on the change in quantity 1. MR = TR Q ii. Initial MR= first price iii. The MR curve will always lie below the demand curve and it's slope will be twice as great iv. The point where MR intersects the X-axis (extended upward to intersect the Demand curve) represents unit-elasticity. 1. Less demand (left of the point) elastic 2. More demand (right of the point) inelastic ...

  • 1 Pages

    514ps3

    Seattle, MBA 514

    Excerpt: ... Professor Ellis MBA 514 Problem Set #3 (not to be graded) Complete the following exercises from the textbook (BDS). 1. Chapter 8, Exercise 2 2. Chapter 8, Exercise 3 3. Show that in an infinitely-repeated pricing game with two firms (Bertrand Duopoly), each producing a homogeneous product at the same constant marginal cost, the firms can end up charging the monopoly price and splitting the monopoly profits as long as the per period discount rate is less than 100% (as long as the per period discount factor is greater than 1/2). Note: Assume that in a given period, the firm charging the lower price would capture the entire market. If the firms charge the same price, they split the quantity demanded at that price. Try to complete this exercise without specifying the functional form of the downward sloping demand function. ...

  • 2 Pages

    9 Wednesday, September 13, 2006

    N.C. State, EC 201

    Excerpt: ... Wednesday, September 13, 2006 Microeconomics Air Quality 4 3 2 1 MC MC curve Is upward sloping Textile prod. 1 2 3 4 5 air quality MC Good 1 Will have a straight line because the MC is constant Good 2 MC of Good 1 MC Good 1 MARGINAL BENEFIT EXAMPLE MB MB curve is downward sloping First one is really satisfying then slowly gets less thirsty 1 2 3 4 5 Glasses of lemonade Wednesday, September 13, 2006 MARGINAL COST AND MARGINAL BENEFIT Air Quality 0 1 2 3 4 5 MC MB 600 300 200 Total Cost 0 100 300 600 1000 1500 MC 100 200 300 400 500 Total 0 1000 1600 1900 2000 2050 MB 1000 600 300 100 50 MB/MC 900 300 0 -300 -450 1 2 3 4 5 3 is the optimal or efficient amount Supply and Demand- A study of markets Market = A group of buyers and sellers of a particular good or service Buyers and Consumers = the demand for the good Sellers, Producers = the supply of goods and servicies ...

  • 2 Pages

    Macroeconomics Notes 2-11-08

    American, ECON 100

    Excerpt: ... onth) at specified prices Example: Mrs. Clinton's demand for chicken Price $8 $7 $6 $5 $4 $3 Quantity Purchases 1 2 3 4 5 6 Notes: 1. Demand curve is downward sloping (negatively-sloped) o Illustrates the law of demand, which states that other things being equal, more of a commodity will be purchased at a lower price 2. Demand curve is linear; any linear relationship can be expressed in an exact mathematical form which can be found in three easy steps o General equation for a straight line: y = mx + b / y = a + bx Step 1: find slope; slope = = Step 2: substitute slope = 2 into general equation and the coordinates of any two points to solve for A o Preferred form is to write quantity demanded (Qd) in terms of price o Market DD is summation of individual demand schedules Assume there are 20 million consumers of chicken, hence market DD Price Qd $8 20 million $7 40 million $6 60 million $5 80 million $4 100 million Notes: o Market DD in is downward sloping o Market DD is linear ...