SLIDES BY SOLINA LINDAHL
CHAPT
ER
6
Elasticity
PRICE ELASTICITY OF DEMAND
A demand curve is elastic when an
increase in price reduces the quantity
demanded a lot (and vice versa).
When the same increase in price
reduces quantity demanded just
a
little, th
SLIDES BY SOLINA LINDAHL
CHAPT
ER
4
Consumer and Producer
Surplus
MEASURING MARKET EFFICIENCY
Markets are sometimes efficient: we
can measure their benefit to society
by measuring:
consumer surplus.
producer surplus.
4- 2
Back to
Table of
contents
CONSUME
Economic Principles I
Loyola University Chicago
Reeves Johnson
Department of Economics
Quinlan School of Business
What is Economics?
The study of the EconomyWhat is the
Economy?
How societies organize themselves to provide
for their material well-being.
Managerial Economics
Day 5
Chapter 10 Monopoly Pricing
Kalok Chu
Loyola University
Fall 2016
Recall Monopoly
Graph, consumer surplus, producer surplus?
How to find the profit-maximizing Q and P?
Single price monopoly
Next question:
how can they do better?
Managerial Economics
Day 3
Chapter 5 Production Theory
Kalok Chu
Loyola University
Winter 2016
Production
An input-output relation
Input: Capital, Labor, Material, other Resources
Output: Service, or Physical Product (Tangible or
intangible)
Cost Efficien
Managerial Economics
Day 1
Chapter 2 Supply and Demand
Kalok Chu
Loyola University
Winter 2016
Demand and Supply
Analysis
Demand: Downward
slopping
Supply: Upward slopping
Equilibrium
Where the two line intersects
DONE!
Pit Market Trading
Game
Card Versio
Managerial Economics
Day 2
Chapter 4 Consumer Theory
Kalok Chu
Loyola University
Winter 2016
Activity:
The Ultimatum Game
2 players
Each student will be randomly matched with
another student to be player 1 and player 2
Game Procedure
Player 1 will receive
Managerial Economics
Day 1
Chapter 1 Introduction to Economics
Kalok Chu
Loyola University
Fall 2016
What is Economics?
Greek: The Rule of Household
One sentence: The study of how to efficiently
allocate your resources
3 Questions: What, How, Who
Social S
Managerial Economics
Day 2
Chapter 3 Elasticity
Kalok Chu
Loyola University
Winter 2016
Elasticity
Definition
The X elasticity of Y
=Percentage change in Y/Percentage change in X
=X/Y dy/dx
We can talk about any elasticity as we want now!
Calculation Part
Managerial Economics
Day 5
Chapter 9 Monopoly
Kalok Chu
Loyola University
Fall 2016
Recall Monopoly
Price setter
High market power
High barrier to entry
Only one seller, one product
Pricing for Monopoly
Same cost graph as Perfect Competition
Same rule to
Managerial Economics
Day 4
Chapter 7 Firm Organization and Market Structure
Kalok Chu
Loyola University
Winter 2016
Firm Profit
Maximization
Firms maximize profit!
Revenue = Price x Quantity
Cost = What we learned last time
TC = VC + FC
Profit = Revenue C
Managerial Economics
Day 4
Chapter 8 Perfect Competition
Kalok Chu
Loyola University
Winter 2016
Perfect Competition
Many identical buyers and sellers
All firms produce identical products
All parties have perfect information about price and
product
Neglig
Answer Key, QUIZ 1
ECON 303
Regina Trevino
1. (b) First we get the equilibrium by setting demand and supply equal:
302p = 4p,
Then, we solve for equilibrium price and find that p*=5. Now, we substitute this price in either
the demand or the supply to find
QUIZ 1
ECON 303
Regina Trevino
Exercise 1 If the supply and demand functions are given by Qd = 30 2p and Qs = 4p. Which of
the following statements regarding the demand and supply elasticities at equilibrium is true?
(a)
The elasticity of demand is 0.5.
(
Dr. Edward F. Stuart
E-mail: estuart1@luc.edu ; 1 312 915 6549
Office: Schreiber Center 705; Crown Center 434.
Office Hours:
12.30 14.00 Tuesday-Thursday Crown Center 434 or
by appointment.
Economics 323 001: International Economics
Classroom: Dumbach 117
1
Dr. Bob Barnes
bbarnes1@luc.edu
Schreiber 714, 5-6608
16 East Pearson, Chicago, IL 60611
Office Hours: MWF 11:45am to 1:15pm
Econ 202 Economic Principles II (Principles of Macroeconomics)
Catalog Description: This course is an introduction to national p
1
ECON 202 EXAM 3 PRACTICE QUESTIONS (CHAPTER 13, 14, 15, 17)
CHAPTER 13
1. Last year a country had $700 billion of saving and $900 of investment. This year it had $1000 billion of saving and
$800 billion of investment. By how much did net capital outflow
1
Chapter 10, 11, 12 practice questions
Figure 28-7
1. Refer to Figure 28-7. If the minimum wage is set at $100, how many will be unemployed?
2. Refer to Figure 28-7. If the minimum wage is equal to $125, what is the quantity of labor supplied, the quanti
1
Chapter 8 Savings, investment, and the Financial System
1. What is a bond buyer promised when she buys a bond?
2. Bond A and Bond B have identical characteristics except that Bond A has a higher interest rate. Which bond has a
higher credit risk?
3. Bon
Quiz 2
ECON303
Prof. Regina Trevino
Answer Key
1. (d) If the supply is perfectly inelastic ( s 0 ), then the producers pays all the tax. Note that the other case in
which the producers pay all the tax is if the demand is perfectly elastic ( d ) but none o
Quiz 2
Regina Trevino
ECON303
Multiple Choice
Question 1 In which case would producers pay most of the tax?
(a) d 0 and S 2
(b) d 0.025 and S 3.5
(c) d 1 S 1
(d) d 1 and S 0
(e) There is not enough information since economic incidence depends on the legal
LECTURE NOTES FOR INTERMEDIATE MICROECONOMICS
PROF. REGINA TREVINO
Lecture Zero:
Mathematical Preliminaries
The following is a very terse review of elementary algebra and calculus. We will use
these concepts in class; nonetheless, this is certainly the mo
LECTURE NOTES FOR INTERMEDIATE MICROECONOMICS
PROF. REGINA TREVINO
Chance favors only the prepared mind.
Louis Pasteur
Lecture Three:
Decision-making under Risk and Uncertainty
We have demonstrated already that the downward sloping market demand curve is
LECTURE NOTES FOR INTERMEDIATE MICROECONOMICS
PROF. REGINA TREVINO
Lecture Five
Perfect Competition
5.1 THE MARKET CONDITIONS OF PERFECT COMPETITION
In this lecture we consider the decisions of price-taking firms in competitive markets. The
following are
Practice Problems Module 2
ECON 303
Regina Trevino
2. Consumers Choice
Exercise 1 A consumer has income of $200. Good x costs $4 per unit and good y costs
$10 per unit.
a). Graph the consumers budget constraint.
b). Show what happens to the budget constra
Practice Problems Module 3
ECON 303
Regina Trevino
3. Consumer Surplus; Choice under Uncertainty
Multiple Choice
Exercise 1. A risk-averse individual is offered a choice between a gamble that pays
$1,000 with probability 25% and $100 with probability 75%,
LECTURE NOTES FOR INTERMEDIATE MICROECONOMICS
PROF. REGINA TREVINO
Lecture Six
Market Intervention
The role of the economist in discussions of public
policy seems to me to prescribe what should be done in
the light of what can be done, politics aside, and
Practice Problems Module 1
ECON 303
Regina Trevino
1. Supply and demand; Elasticities
Multiple Choice.
Exercise 1 The following demand and supply functions describe the market for natural
gas. The g subscripts denote natural gas and the o subscript denote
Exercises Module 6
ECON 303
Regina Trevino
Exercise 1 Suppose that in a certain country (not far away from here) the First Ladys
brother runs a firm whose supply function is given by Qs=10,000. You can assume that
the demand in this market is downward slo