Principles of MicroEconomics Speech or Presentation

Principles of MicroEconomics - Speech or Presentation Example This will cause an increase in price of butter. Holding all other factors constant the demand of butter will reduce form Q0 to Q1.this can be seen well from the graph. a. True. Price elasticity of demand is the responsiveness or sensitivity of consumers to price changes. The demand curve shows the quantity of goods or services individuals are willing are will to buy at different prices. Price elasticity coefficient us given by: b. False. This because cross-price elasticity of demand is a ratio of the percentage change in the quantity demanded of some good X to a percentage change in the price of some other Y. This means that if the two goods are substitutes the cross elasticity will be positive and if the cross-price elasticity of demand is negative the good are complimentary. c. True. This is because in the short run everything is fixed, therefore constructors have limited time to increase construction of apartments. Even though construction firms can still increase production by increasing labor force and efficiency, but relative to the long run supply is still inelastic. In the long run construction firms have enough time to change quantities of their resources and for new firms can start constructing apartments. Therefore the longer the time the more likely will increase quantity of apartments supplied. Even-though the time may not be long enough to change their production techniques to meet the supply needs, they have longer responsive time to switch resources such as raw materials, location of construction and amount of