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Introduction to the simple stuff in demand, economics.
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Define Demand
When someone is willing and able to purchase a good or service.
What is the demand curve, what does it show?
Demand curve is a downward sloping curve that shows the inverse relationship between price and quantity demanded.
Define contraction and extension in demand
Contraction- Price increases, contraction in demand
Extension- Price decreases, extension in demand
Define Inelastic demand and total revenue
when price increases, demand decreases by a smaller amount, overall revenue increases
when price decreases, demand increases by a smaller amount, overall revenue decreases
Define Elastic demand and total revenue
When price increases, demand decreases by a larger amount, overall revenue decreases
When price decreases, demand increases by a larger amount, overall revenue decreases
Define Unitary elastic demand and total revenue
When price goes up or down, total revenue doesnt change.
How do you calculate total profits?
Total revenue - Total costs = total profits
How do you calculate total revenue?
Price x Quantity = Total revenue
What do neoclassical economists assume of producers and consumers?
They assume producers want to maximise profits and consumers want to maximise utility