• Notes
  • nizhes
  • 4
  • 100% (1) 1 out of 1 people found this document helpful

Info icon This preview shows pages 1–3. Sign up to view the full content.

QUIZ 2 – BE PREPARED, QUIZ 2 WILL BE HARDER THAN QUIZ 1 Chapter 6 – Elasticity 1. Price Elasticity of Demand: % ∆ in Quantity Demand / % ∆ in Price % ∆ = Q2-Q1 / Q1 (percent change formula do not use for price elasticity of demand, use midpoint formula and say you are using the midpoint formula) 2. Midpoint formula: (Diff in Q / Avg Q) / (Dif in P / Avg P) = [(Q2 – Q1) / (Q2+Q1)] / [(P2-P1) / (P2+P1)] div by 2 falls out 3. Cross Price Elasticity: % ∆ in Quantity (A) Demanded / % ∆ in Price of (B) *** (different) 4. Price Elasticity of Supply: % ∆ in Quantity Supplied / % ∆ in Price 5. ***Income Elasticity of Demand: % ∆ in Quantity Demanded / % ∆ in Income E > 1 ; Normal good that is a luxury (can do without elastic) 0<E<1; Normal good that is a necessity (cannot do without inelastic) E < 1 ; Inferior good ***only instance where we consider sign for E *** Chapter 7 – 1.) Be aware of the A) advantages and B) disadvantages to: Corporations – A) Limited Liability (there are many others) B) Managers’ goals are often different from the goals of the company (Mgrs lack proper incentives). Partnerships- A) Less risk and liability; greater pool for capital (start-up money) B) Decisions are not unilateral (decisions need to be made in agreement) Sole Proprietorships- A) Owner receives all of the profits (proper incentives to work hard) B) Owner bares all the risk and liability (can be sued and lose everything) 2. Silent Partner – a contributor in a partnership/corporation that only participates by providing capital (not involved in decision-making) Chapter 8 – Comparative Advantage and International Issues 1. Review comparative advantage (handout is on blackboard) 2. Why is trade important? Gains to trade, specialization, opp costs Explain why outsourcing does not hurt American economy as a whole Understand that trade allows for increased consumption (a gain to trade) 3. Understand how a country will possess comparative advantage Abundant natural resources and favorable climate Labor advantages (more skilled or more unskilled will determine in which goods a country has advantage) Technological advantage more efficient sue of resources 4. Understand Free Trade and trade with restrictions (positive vs. normative effects) Tariffs: economic benefits/costs and social benefits/costs Quotas and voluntary export restraint: same criteria 5. Dumping: selling a product below cost why would this happen?
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

6. Try to figure out the Diamond-Water paradox (Marginal Utility affecting price)
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern