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PERFECT COMPETITION, LOSS MINIMIZATION: A perfectly competitive firm is presumed to produce the quantity of output that minimizes economic losses, if price is greater than average variable cost but less than average total cost. This is one of three short-run production alternatives facing a firm. The other two are profit maximization (if price exceeds average total cost) and shutdown (if price is less than average variable cost).
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INELASTIC DEMAND: The general elasticity relation in which relatively large changes in price cause relatively small changes in quantity demanded. Large changes in price cause relatively small changes in quantity demanded or the percentage change in quantity demanded is smaller than the percentage change in price. This characterization of elasticity is most important for the price elasticity of demand. Inelastic demand is one of two general elasticity relations for demand. The other is elastic demand. An inelastic demand relation is NOT a very responsive, or stretchable, relation. The inelastic demand relation is most often directed toward demand in terms of the price elasticity of demand. In this context, demand is said to be inelastic if the percentage change in quantity is smaller than the percentage change in price. This means that buyers are not responsive to price changes.An inelastic demand relation can fall into one of two categories--perfectly inelastic and relatively inelastic. - Perfectly Inelastic: Perfectly inelastic means that quantity demanded is unaffected by any change in price. In other words, the quantity is essentially fixed. It does not matter how much price changes, quantity does not budge. Perfectly inelastic demand occurs when buyers have no choice in the consumption of a good.
- Relatively Inelastic: Relatively inelastic means that relatively large changes in price cause relatively small changes in quantity. In other words, quantity is not very responsive to price, but it does change. More specifically, the percentage change in quantity demanded is less than the percentage change in price. Relatively inelastic demand occurs when buyers are only able to choose among a small number of imperfect substitutes-in-consumption.
Recommended Citation:INELASTIC DEMAND, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: November 4, 2024]. Check Out These Related Terms... | | | | | | | | | | | | | | Or For A Little Background... | | | | | | | And For Further Study... | | | | | | | |
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Today, you are likely to spend a great deal of time searching the newspaper want ads looking to buy either a set of hubcaps or handcrafted decorations to hang on your walls. Be on the lookout for malfunctioning pocket calculators. Your Complete Scope
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Rosemary, long associated with remembrance, was worn as wreaths by students in ancient Greece during exams.
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"Kites rise highest against the wind, not with it. " -- Winston Churchill, British prime minister
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DCE Domestic Credit Expansion
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