Vocabulary is important in lots of subjects. It is in economics. So please defin
ID: 1240583 • Letter: V
Question
Vocabulary is important in lots of subjects. It is in economics. So please define or demonstrate your familiarity with terms below. provide an example of a positive statement and a normative statement (be sure to label each) the elasticity of demand where, at that price-quantity combination , total revenue is maximized the invisible hand economic concept of cost two prerequisites for a market economy cross-elasticity of demand for substitute goods versus cross-elasticity of demand for complements. the distinction between an English auction versus a Dutch auction?Explanation / Answer
a. Positive Economies considered as the economics where we are concerned with what is happening. We try to give reasons to the underlying phenomena Normative economics expresses judgement about what the economy should be like and how should it be b. Elasticity of Demand refers to the degree of responsiveness of the quantity to the unit change in price. It reflects how much the quantity changes when price is increased by 1 unit. c. Invisible hand refers to the term coined by Adam Smith. He told that any sort of imperfection in the market is dealt by an invisible hand i.e the market corrects itself and government intervention is not required. d. Economic concept of cost: Cost in economics refers to the costs of employing various factors of input into the production. When a factor is employed then the amount you pay to the factor to utilize its services is known as cost of the factor of production. e. There is perfect information in the market. Government role is minimum. Markets produce only private goods and no public good exists. f. Cross elasticity (Substitute goods): Elasticity of change in quantity demanded of A when the price of B changes. where A and B are substitute goods. Example: Tea and Coffee. When tea's price increases people switch to coffee. Cross elasticity (Complementary goods): Change in quantity demanded of A when the price of B changes. (Example: Bread and Butter) When the price of butter increases the demand for bread will decrease.
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