Why Do Economists Use the Concept of Elasticity in Addition

question 102

Multiple Choice

Why do economists use the concept of elasticity in addition to measurement of the slope of the demand curve?

• A) Mathematical equations are favored over graphical analysis.
• B) Elasticities are independent of the units of measure.
• C) The concept of elasticity can be used in other areas of economics, whereas the slope of the demand curve is only useful in demand analysis.
• D) These terms are interchangeable, but elasticity has the more professional sound.

Calculate maximum profit and optimal pricing strategies for monopolistically competitive firms.

Understand the long-run adjustments in monopolistically competitive markets.

Explain the externalities associated with entry and exit in monopolistically competitive markets.

Identify deadweight loss in different market structures and scenarios.

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Definitions:

Potlatch

On the northwestern coast of North America, a ceremonial event in which a village chief publicly gives away stockpiled food and other goods that signify wealth.

Conspicuous Consumption

The spending of money on luxury goods and services to publicly display economic power—the social status of the consumer.

Ecological Adaptive

The process by which organisms adjust to changes in their environment to maintain or improve their survival prospects.

Domesticated

Refers to animals or plants that have been modified from their natural states to be of use to humans through selective breeding.