Summary
Summary ECONOMICS 1A
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THIS DOCUMENT CONTAINS CONTENT BASED ON MICROECONOMICS USING A FIRM AS AN EXAMPLE
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, Chapter 4 InformationTopic: The business environment of a firm
E-Book: Page 62-174
Activity: 46-95
Outcome:
•Linear demand function
•Consumer sensitivity analyses
•The rational consumer
•Supply & market-clearing
•Short-run production analysis
•Concepts of returns to scale and input productivity efficiencies, net efficiencies of inputs and
elasticity of substitution.
•Short- and long run cost analyses
•Competitive environment of the firm
•Selective pricing practices
,Business environment of the firm
, Market demand conditions
Linear demand function
- Law of demand (negative relationship between price and quantity demanded
P = 170 -20Q
slope: ΔP/ ΔQ = 130-100/3.5-2 = 20
Q = 170/
20-1/20 P thus Q = 8.5 – 1/20P
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