Answer:

Average cost, divide the sum of variable costs and fixed costs by the quantity of units
produced
Marginal cost =change in total cost/change in quantity

Quantity Total fixed Total Variable Total cost Average cost Marginal cost
cost cost
25 10 18 28 28/25 28
26 10 20 30 30/26 2/1=2
27 10 21 31 31/27 1/1=1
 The price of the good or service.:
 The law of demand states that when prices rise, the quantity of demand
falls. That also means that when prices drop, demand will grow. People
base their purchasing decisions on price if all other things are equal. The
exact quantity bought for each price level is described in the demand
schedule. It's then plotted on a graph to show the demand curve.
 The demand curve only shows the relationship between the price and
quantity. If one of the other determinants changes, the entire demand
curve shifts.
 If the quantity demanded responds a lot to price, then it's known as elastic
demand. If the volume doesn't change much, regardless of price,
that's inelastic demand.

 Income of buyers.
When income rises, so will the quantity demanded. When income falls, so
will demand. But if your income doubles, you won't always buy twice as
much of a particular good or service. There's only so many pints of ice
cream you'd want to eat, no matter how wealthy you are. That's where the
concept of marginal utility comes into the picture. The first pint of ice cream
tastes delicious. You might have another. But after that, the marginal utility
starts to decrease to the point where you don't want any more.

 Prices of related goods or services. ...

 The price of complementary goods or services raises the cost of using the
product you demand, so you'll want less. For example, when gas prices
rose to $4 a gallon in 2008, the demand for Hummers fell. Gas is a
complementary good to Hummers. The cost of driving a Hummer rose
along with gas prices.
 The opposite reaction occurs when the price of a substitute rises. When
that happens, people will want more of the good or service and less of its
substitute. That's why Apple continually innovates with its iPhones and
iPods. As soon as a substitute, such as a new Android phone, appears at
 a lower price, Apple comes out with a better product. Then the Android is
no longer a substitute.

 Tastes or preferences of consumers:

When the public’s desires, emotions, or preferences change in favor of a
product, so does the quantity demanded. Likewise, when tastes go against
it, that depresses the amount demanded. Brand advertising tries to
increase the desire for consumer goods. For example, Buick spent millions
to make you think its cars are not only for older people.
 Expectations.
When people expect that the value of something will rise, they demand
more of it. That explains the housing asset bubble of 2005. Housing prices
rose, but people bought more because they expected the price to continue
to go up. Prices increased even more until the bubble burst in 2006.
Between 2007 and 2011, housing prices fell 30 percent. But the quantity
demanded didn't grow. Why? People expected prices to continue falling.
Record levels of foreclosures entered the market due to the subprime
mortgage crisis. Demand didn't increase until people expected future
prices would, too.

 Number of buyers in the market.

The number of consumers affects overall, or “aggregate,” demand. As more
buyers enter the market, demand rises. That's true even if prices don't change.
That was another reason for the housing bubble. Low-cost and sub-prime
mortgages increased the number of people who could afford a house. The total
number of buyers in the market expanded. This increased demand for housing.
When housing prices started to fall, many realized they couldn't afford their
mortgages. At that point, they foreclosed. That reduced the number of buyers
and drove down demand.
Answer:

Income Elasticity of demand= (% change in the quantity demand) / (% change in income) ={(Q2-Q1)/Q1}
/ {(Y2-Y1)/Y1} = (5/20) / (5000/10000)=2\4=1/2=0.5

It is a normal good because Income elasticity of demand is positive. A normal good is any good for
which demand increases when income increases, i.e. with a positive income elasticity of demand.
Cross elasticity of demand is the degree to which the quantity
demanded of one commodity responds to a change in the market price
of another commodity.

The formula for measuring the coefficient of cross elasticity

of demand is:
=(60/100)*100/(10/40)*100=2.4

Cross elasticity may be positive or negative, depending on the relation-

ship between the two commodities. If two commodities are
substitutes, cross elasticity between them will be positive, i.e., a rise in
the price of the first commodity will cause an increase in the demand
for the other. For example, a 5% rise in the price of tea might result in
a 6% increase in the demand for coffee, in which case cross elasticity is
(+ 6/100)/ (+ 5/100) or, 1-2.
The higher the cross elasticity, the greater is the case of substitution. If
the articles are perfect substitutes (and thus essentially the same thing
to the users), their cross elasticity is infinite. If the commodities are
complements, cross elasticity will be negative, i.e., a rise in the price of
one commodity will cause a fall in the demand for the other.
For example, if the price of milk rises, less sugar will be bought and
there will be a fall in the demand for coffee also. If a 10% rise in the
price of milk results in a fall of 8% in the demand for coffee, cross
elasticity is (- 8/100) / (+ 10/100) or, – 0.8.
Fig.18 shows that cross elasticity of demand for substitute goods is
positive and for complementary goods it is negative. Cross elasticity of
demand in case of tea and coffee will be positive, because a fall in the
price of tea would lead consumers to substitute it for coffee.