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Why the short run demand curve is usually less elastic than the long run demand curve?
Wiki User
∙ 15y ago
this was just covered in econ 201 today...people have less time to adapt and find substitute goods in the short-run, but as time passes they are able to find substitutes, making it more elastic.
Wiki User
∙ 15y ago
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Is a firm's demand for labor curve is more elastic in the short run than in the long run?
No. It's more elastic in the long run than the short run.
Is The supply curve more or less elastic in the long run than the short run?
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A purely competitive firm's short-run supply curve is?
Because of the price taking nature of the firm in the perfectly competitive market. The supply curve would be the portin of the (Marginal Cost Curve) that disects the (P=Ar=Mr curves). Som from that point up would be the supply curve, to produce below that point would not be beneficial to the establishment. Up sloping and equal to the portion of the marginal cost curve that lies above the average variable cost. The demand curve is also perfectly elastic, this too contributes to the fact.
Price inelasticity of demand?
The elasticity of demand is related to the slope of the demand curve, but is not the same. The steeper the demand curve is the more the consumers "must" have the good. Lifesaving medicine, for example, has a very steep demand curve because producers can raise the price without appreciably decreasing the quantity demanded. Goods like this are inelastic. Goods with many alternates, like potato chips, are elastic. If the price is raised, consumers will purchase alternates instead, like pretzels.
What is the meaning of the intersection of three curves the AD curve and the short run AS curve and the long run AS curve?
Using the AD-AS model, start with a long-run equilibrium and assume velocity V is constant, then analyze the following case: The pandemic recession is the result of adverse Demand and Supply shocks. a. What happens to the Aggregate Demand curve and What happens to the Aggregate Supply curve? b. What happens to output Y and the price level P in the short run? c. What short-run problems are created for the labor and goods markets? d. What kinds of stabilization policies are required to stimulate recovery? Describe the 5 specific tools and their directions of change to be used.
Is a firm's demand for labor curve is more elastic in the short run than in the long run?
No. It's more elastic in the long run than the short run.
Is The supply curve more or less elastic in the long run than the short run?
more
A purely competitive firm's short-run supply curve is?
Because of the price taking nature of the firm in the perfectly competitive market. The supply curve would be the portin of the (Marginal Cost Curve) that disects the (P=Ar=Mr curves). Som from that point up would be the supply curve, to produce below that point would not be beneficial to the establishment. Up sloping and equal to the portion of the marginal cost curve that lies above the average variable cost. The demand curve is also perfectly elastic, this too contributes to the fact.
Price inelasticity of demand?
The elasticity of demand is related to the slope of the demand curve, but is not the same. The steeper the demand curve is the more the consumers "must" have the good. Lifesaving medicine, for example, has a very steep demand curve because producers can raise the price without appreciably decreasing the quantity demanded. Goods like this are inelastic. Goods with many alternates, like potato chips, are elastic. If the price is raised, consumers will purchase alternates instead, like pretzels.
What is the meaning of the intersection of three curves the AD curve and the short run AS curve and the long run AS curve?
Using the AD-AS model, start with a long-run equilibrium and assume velocity V is constant, then analyze the following case: The pandemic recession is the result of adverse Demand and Supply shocks. a. What happens to the Aggregate Demand curve and What happens to the Aggregate Supply curve? b. What happens to output Y and the price level P in the short run? c. What short-run problems are created for the labor and goods markets? d. What kinds of stabilization policies are required to stimulate recovery? Describe the 5 specific tools and their directions of change to be used.
What is the definition of price elasticty of demand?
Demand elasticity is how much demand is affected based on a change in price. An elastic good is highly affected by price small chanages. Demand plummets and people substitue for something else. An inelastic good is not affected by any size change in price. Basically, elasticity is a measure of how essential a good is to people. On a supply/demand chart, demand elasticity is measured by the slope of the demand curve. Steeper curves are less elastic. Examples: Gasoline demand is fairly inelastic. Global demand for gasoline changes very little between $1.50 per gallon and $3.00. People buy almost the exact same amount at any price (in the short run). A particular brand of coffee would be fairly elastic. If Folgers and Maxwell House were both selling coffee for $4 a pound demand would be fairly equal (assuming there are no taste differences and brand loyalty). If Folgers raised their price to $4.25, pretty much everyone would buy the Maxwell House, all else being equal.
Does Economies have a self correcting mechanism for inflationary and recessionary gaps Expain?
Yes they do. In an inflationary gap the equilibrium with the aggregate demand and the short run aggregate supply curves is higher than the long run aggregate supply curve. Eventually, the short run aggregate supply curve will slowly move to the left towards equilibrium. Output in an inflationary gap cannot be held up. This is not usually allowed, usually monetary and fiscal policies work to move the aggregate demand. In a recessionary gap, the opposite will happen. The short run aggregate supply curve will move to the right slowly towards equilibrium because the natural rate of unemployment is higher than the actual rate of unemployment so people will be willing to work for less.
Why does a demand curve slope downward to the right under what circumstances will a demand curve slopes upward to the right?
A demand curve has a negative slope due to the law of demand, which states that as price decreases, demand increases. Mathematically, this a property known as convexity of preferences, which roughly means that people always improve their outcomes by having strictly more of something. There are types of goods speculated to not be strictly convex in preferences, primarily the Giffen Good, whose demand increases as price increases (some historical examples may include potatoes during the Irish Potato Famine, short-term stocks, and diamonds).
Increased consumer spending will usually cause?
In the short run increased consumer spending causes an increase in Aggregate Demand and therefore an increase in both Real Gross Domestic Product and Price Levels. Also this generally means; inflation, decrease in unemployment, and growth, these can vary however, depending on where on the Aggregate Supply curve the AD curve is.
Why MR curve is always half of demand curve explain graphically?
Marginal Revenue is the derivate (rate of change) of total revenue. Total revenue is = Price x Quantity. For instance, if the demand curve was Q = 100 - P, find the inverse demand (P = 100 - Q). Total Revenue = 100Q-Q^2Therefore marginal revenue is the derivative of 100Q - Q^2.MR = 100 - 2Q (thus twice the negative slope).In short: inverse demand x Q, find the derivative.Source(s):Microeconomic Theory Class
Write a short note on decrease in demand?
A decrease in the willingness and ability of buyers to purchase a good at the existing price, illustrated by a leftward shift of the demand curve. A decrease in demand is caused by a change in a demand determinant and results in a decrease in equilibrium quantity and a decrease in equilibrium price. A demand decrease is one of two demand shocks to the market. The other is a demand increase. A demand decrease results from a change in one of the demand determinants. The leftward shift of the demand curve disrupts the market equilibrium and creates a temporary surplus. The surplus is eliminated with a lower price. The comparative static analysis of the demand decrease is that equilibrium quantity decreases and equilibrium price decreases.
What is the relationship between long-run average cost curve and short-run average cost curve?
what is the relationship between long run average cost curve and short run average cost curve?
