Week 2 Economics Essay Example | Topics and Well Written Essays - 750 words

Week 2 Economics - Essay ExampleIn such a situation, an add-on in price causes the revenue earned by suppliers to go up and iniquity versa. In contrast, the price elasticity is termed elastic whenever the change in ingest of a quantity is greater in comparison to a change in price. in this situation, an increase in price causes the revenue to fall and vice versa. In a perfectly elastic situation, a change in price will cause fill to fall to zero thereby deliverance the corresponding revenue to zero. However, when the situation resembles a perfectly inelastic coil, a change in price has no influence on the quantity demanded and the demand curve is a vertical line, which is in clear violation of the law of demand.In a perfectly competitive market, a number of producers are producing monovular goods with no product differentiation. Therefore, a producer cannot set any price as desired as doing so would put them out of business ascribable to availability of substitutes.Accounting clear is price minus costs for all processes that help bring a product or service to the market. Economic profit is the money earned by investor as a result of their investments. As such, it does not have anything to do with the way firms use that investment to produce goods and sustain accounting profit. Economic profit can be negative even when accounting profit is in the green zone.Short term decision making is driven by the immediate demand and supply forced in the market to which the firm may not be able to make major(ip) investments or changes and may have to use present capacities to produce the maximum quantity. Long term decisions require time to implement and must be aforethought(ip) in advance taking the long term demand and supply into consideration.The combination of price and the production function gives the cost curve. The total cost curve is the amount spent on all fixed and variable costs while the