Question

Your answer to the homework has to be more than five(5) sentences for each question based on researched facts and logical analysis to earn the full credit.

Q 1) (2 points) Make a distinction of the price elasticity of demand , in terms of elastic, unitary and inelastic.

Q 2) (2 points) Explain the law of diminishing marginal utility & the law of diminishing return in terms of definition and cause.

Q 3) (2 points) Suppose a liquor store has to pay $1 of sales tax over a six-pack of Beer. If the main customers of the liquor store are perfect price elastic, who pay $1 of sales tax between the liquor store and the main customers? why? If the main customers of the liquor store are perfect price inelastic, who pay $1 of sales tax between the liquor store and the main customers? why?

Q 4) (2 points) Describe the shape of AFC(average fixed cost), AVC(Average Variable cost), ATC(Average total cost) and MC(Marginal cost) Explain graphic relationship among ATC, AVC and MC.

Q 5) (2 points) Is Accounting profit smaller than Economic profit? If yes, why? If not, why not ? Define Accounting profit and economic profit.

Answer 1

As per HOMEWORKLIB RULES in case of multiple questions only the first question is to be attempted

Kindly ask rest of the questions in a separate post

1.

Price elasticity of demand refers to the degree of responsiveness of change in quantity demanded of a good due to change in its price.

Elastic demand is when price elasticity of demand value is greater than 1 and a change in price in price leads to a more than proportionate change in quantity demanded.

Unitary elastic demand has elasticity value of 1 and a change in price equals proportionate change in quantity demanded.

Inelastic demand has elasticity value less than 1 and a change in price leads to a less than proportionate change in quantity demanded of the good.