ECO - CH6 (II)

• Demand Curves


  Functions that relate the price of a product to the quantity demanded by consumers
• Price Trade-off


  This decides on how much to sell and how many to sell
• Elasticity


  Used to define the change in behavior of the sellers or buyers because of the change in price and/or other determinants of supply and demand
• When a boss mentions that "demand is elastic"

  The price is too high
• Demand Curves

  Functions that relate the price of a product to the quantity demanded by consumers
• Simple Pricing


  Selling a single product at a single price
• Products with close substitutes

  • Have elastic demand
• Price Trade-off


  Decides on how much to sell and how many to sell
• Profit maximized when

  MR = MC
• Elasticity


  Used to define the change in behavior of the sellers or buyers because of the change in price and/or other determinants of supply and demand
• Aggregate Demand


  The total quantity of goods and services demanded by households, firms, and the government at different price levels within an economy over a specific period
• Most firms' pricing strategies involve selling multiple products at different prices
• When demand is elastic

  The price is too high