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HBX Core - Economics for Managers questions and answers graded A+ 2024/2025
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HBX Core - Economics for Managers questions and answers graded A+ 2024/2025
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HBX Core - Economics for ManagersWhat is Willingness to Pay (WTP)?
Willingness to pay is the maximum amount of cash a purchaser is inclined to pay for a services
or products.
What occurs if the rate of a product is higher than a consumer's WTP?
That patron will now not purchase the product.
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What are some observable elements that have an effect on WTP?
Income, gender, age, and many others.
What are a few not-effortlessly observable factors that have an effect on WTP?
Consumer's intrinsic choice for the product, substitutes and complements to the product, and so
on.
What does a call for curve for an person buyer summarize?
That customer's willingness to pay for various portions of a product.
What are at the x and y axes of a call for curve graph?
Y-axis: Price
x-axis: Quantity demanded
How can a firm calculate revenue corresponding to unique prices the use of a demand curve?
Fee*quantity demanded (or the place beneath a call for curve)
Demand curves slope _________wards. Why?
Downwards.
,A consumer can have a better WTP for the first unit of a product, but a decrease WTP for next
gadgets. This is because of "diminishing marginal returns."
What is diminishing marginal returns?
An monetary courting pointing out that a patron's willingness to pay for a product have to lower
for added devices of a product (i.E. The 10th milkshake will now not taste as true because the
first).
What reasons shifts inside the call for curve?
Changes in consumer willingness to pay bring about shifts of the call for curve.
An boom in patron WTP for a product will result in a shift of the demand curve _____
Outward
A decrease in patron WTP for a product will result in a shift of the demand curve _____
Inward
What kind of factors that affect WTP correspond to shifts inside the demand curve?
Non-rate factors
What is the difference among slope and shifts in a call for curve?
Slope: Changes in rate correspond to moves alongside the demand curve.
Shifts: Non-rate elements that have an effect on WTP correspond to shifts within the demand
curve (inward or outward).
What does the slope of a marketplace call for curve measure?
How responsive buyers are to changes in fee. When the curve is flat or near-flat, a small dip in
charge sparks a massive surge in the amount demanded. When the curve is steep or vertical,
modifications in rate have little impact on the amount demanded.
Demand is typically extra [elastic or inelastic] if a product is a luxury in place of a necessity, or if
the product has many substitutes.
Elastic
, Steep curves are regularly referred to as [elastic or inelastic]
Inelastic
Flat curves are regularly called [elastic or inelastic]
Elastic
What is an important benefit of the elasticity measure over a slope degree?
Elasticity is a unit-much less degree: it doesn't trade as the gadgets used to degree amount
demanded trade. As a result, one can also more effortlessly compare the elasticities of call for
for special products; slopes do not experience this belongings.
Is elasticity the identical or distinct at every factor on a call for curve with constant slope (i.E., a
instantly-line call for curve)?
Difference, however, that demand curve as an entire might be colloquially referred to as "elastic"
or "inelastic" relying on how flat or steep its slope is.
What does the profits elasticity of call for measure?
How touchy quantity demanded is to a alternate in customers' income.
What are a few kinds of elasticity you could measure?
"income elasticity of call for", "marketing elasticity of demand", or another sort of elasticity.
Price elasticity of call for has a tendency to _______ as price _________.
Increase; Increases
Price elasticity of demand for a specific product will have a tendency to __________ as more
substitute items grow to be available.
Increase
Price Elasticity of Demand (PED)
A measure of the way responsive purchaser demand for a service or product is to a exchange in
rate.
Absolute fee of: % exchange in qty demanded / % change in rate
% change method = (new # - original #)/ authentic #
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