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Economics Sales and Customer Service

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    Open Slideshow Frequently Asked Questions A shift in the demand curve is called? A shift in the demand curve is called? A change in demand What is exceptional demand curve? What is exceptional demand curve? The curve: the quantity demanded will increase when the price of given product. Why does the demand curve have negative slope? Why does the demand curve have negative slope? because quantity is on x axis and price is on y axis and as the price increase the demand decrease What does the market demand curve show? What does the market demand curve show?

    It shows the demand for the product in relation to the price What is a demand curve that is perfectly horizontal? What is a demand curve that is perfectly horizontal? It would be referred to as Perfectly Elastic. This suggest that Price and Quantity are less involved if at all. More exactly, goods are only bought and sold at one price; this would occur in a situation with identical products being offered in a market. For example, think of gasoline. Picture two gas stations at an intersection. If one gas station were to raise prices by five or ten cents, most or all of the customers would buy gas from the cheaper station.

    An increase in the quantity demanded means that a. price has declined and consumers therefore want to purchase more of the product. b. the demand curve has shifted to the right? An increase in the quantity demanded means that a. price has declined and consumers therefore want to purchase more of the product. b. the demand curve has shifted to the right? a) price declined. QD as opposed to Just demand refers to movement along the demand curve What is rectangular hyperbola demand curve? What is rectangular hyperbola demand curve?

    This is the curve which shows the unitary elastic demand where the change in quantity demanded equals with the change in price. Explain the shape of the demand curve? Explain the shape of the demand curve? It is a slope that goes downwards from left to right. Which of the following is located at the point where the supply and demand curves intersect? Which of the following is located at the point where the supply and demand curves intersect? The equilibrium price. In which direction does the demand curve on a graph slant? In which direction does the demand curve on a graph slant?

    Downward left to right The nondiscriminating pure monopolist’s demand curve is the industry demand curve.? The nondiscriminating pure monopolist’s demand curve is the industry demand curve.? yes What happens to the demand curve when determinants change? What happens to the demand curve when determinants change? A change in any one or more of these determinants of supply, or supply shifters, will move the supply curve for a product either right or left. What dose it mean a products demand curve shifts to the right? What dose it mean a products demand curve shifts to the right?

    an increase in quantity demanded. How is the law of demand related to the demand curve? How is the law of demand related to the demand curve? Law of demand is the reason of the downward sloping of demand curve. Law of demand states the inverse relationship of demand of a commodity and it’s price,and demand curve represents this inverse relationship of demand and price. So in this way they both are related. Explain movement along the Demand curve versus a shift of the Demand curve? Explain movement along the Demand curve versus a shift of the Demand curve?

    movement on the curve is simply things going along as expected, like ok I want that and other people do too, so the demand curve is high. A shift occurs when the demand changes, like I found something new and everyone wants that thing now, so the demand for that other thing has shifted because nobody wants it anymore. Why does an economist create a market demand curve? Why does an economist create a market demand curve? To predict how people will change their buying habits when prices change. A market demand curve allows an economist to predict the total sales of an item at several different prices.

    What would cause the demand curve to shift? What would cause the demand curve to shift? Demand curves aren’t static. They are constantly shifting. Factors that cause it to shift include: Changes in household income Changes in distribution of income Consumer expectations Population changes Availability of credit Changes in taste or fashion Change in environmental conditions Physical movement of buyers Changes in price Changes in complimentary products or services Changes in competitive products or services Effects of increase of income on the demand curve? Effects of increase of income on the demand curve?

    An increase in income tends to shift the demand curve for a good or service: For a normal good, the curve will shift to the right, indicating an increase in the demand at the same price. For an inferior good, the curve will tend to shift to the left, indicating a decrease in demand at the same price. What is the relation between slope of demand curve and elasticity of demand curve? What is the relation between slope of demand curve and elasticity of demand curve? They are both used to interpret the demand curve. The slope is just the slope, rise or run, Y/X.

    Elasticity is the percentage change in one variable resulting from a percentage change in another variable. Thus, the price elasticity of demand is the percentage change in quantity demanded of a good resulting from a percent change in its price. (P/Q)( Q/ P)This implies that the elasticity is not constant and the elasticity changes along the curve; elasticity goes from 0 (when price is 0) to infinity (when price is very high). Elasticity is a more useful tool for data analysis because it eliminates units and thus the data is easier to interpret. Elasticity is also useful when large numbers are an obstacle in interpreting data like with wage.

    It is also useful when the taking the log with a set of data preserves the integrity of the data, since elasticity is the slope of the log of the data points. Why would demand curve slope upward? Why would demand curve slope upward? The Law of Demand states that price and quantity demanded are inversely related. This means that for a normal good, the demand curve slopes downward. A demand curve might slope upward in the event that instead of being a normal good, we could be witnessing a so-called Giffen good. The existence of Giffen goods is debatable, but in theory they can be shown to be possible.

    The rationale for the upward sloping demand curve is due to the real income effect on a basket of goods when one (or some) of the goods exhibits a price reduction. Under normal conditions, the reduction in price would allow you to purchase more of that good. However, if this is a Giffen good, the consumer will consume less of it in order to purchase more of another good. This is not to be confused with an inferior good, for which a reduction in price leading to an increase in purchasing power results in substituting an inferior good (hamburger) in favour of a normal good (steak).

    This causes a shift in the demand curve. For Giffen goods, no close substitute would cause the consumer to spend less on the cheaper good in order to purchase more of a non-substitute good, say, pencils wherein the cost of rice is reduced. Is an increase in demand represented by a movement up the demand curve? Is an increase in demand represented by a movement up the demand curve? An increase in demand is represented by a shift of the demand curve to the right; not a movement along the demand curve. An increase in the quantity demanded would be a movement down the demand curve.

    How does the demand curve illistrate the law of demand? How does the demand curve illistrate the law of demand? The law of demand states that consumers will buy more of a good when prices are lower and less of a good when prices are higher. In other words, the greater the quantity sold, the lower the price must be offered. The law of demand explains the effect price changes have on consumer behavior, and it applies in real life. Consumers buy significantly more products when there are large sales during the holiday season (e. g. Black Friday). On a supply/demand graph, price is the y-axis and quantity is the x-axis.

    The demand curve stretches from the upper left of the graph (where prices are high and quantity is low) to the bottom right (where prices are low and quantity is high). This matches with the law of demand definition stated above. There are assumptions that must be kept in mind for the law of demand to work. 1) Consumer tastes must stay the same. 2) Consumer income stays constant. 3) Prices of other goods remain the same. 4) The product is a normal good, meaning that demand of the product increases when consumer income increases. 5) Consumer expectations of the product are stable.

    What is the difference between movement or shift along the demand curve? What is the difference between movement or shift along the demand curve? The change in the demand of a commodity due to change in its price leads to moving the demand curve upward or downward depending upon the change in price. When the price rises, the demand falls. And when the price falls the demand for that commodity rises leading to movement in the demand curve. Shift in the demand curve is the result of the price remaining constant but the demand changing due to several other factors such as, change in fashion, population, etc.

    Hence at the same price when more is demanded the demand curve shifts to the right. and at the same price when less commodity is demanded it results in the shift of the demand curve to the left. Difference between a demand schedule and demand curve? Difference between a demand schedule and demand curve? Demand schedule is a tabular representation nd Demand curve is a graphical representation What is the difference between demand function and demand curve? What is the difference between demand function and demand curve? A “demand curve” is Price vs.

    Quantity, holding all else constant; whereas, a “demand function” is Quantity vs. Price, holding all else constant. If you can imagine a graph, with the y-axis being Price, and the x-axis being Quantity, and you were to plot price/quantity data or, perhaps, even a function onto this graph, then that would be a “demand curve”. If you did something similar but, this time, the y-axis was Quantity, and the x-axis was Price, then what you would have, instead, is what is called a “demand function”. A Consumer’s demand curve for a product is downsloping because?

    A Consumer’s demand curve for a product is downsloping because? As a consumer with a finite amount of resources there is a point where the product will become unattainable after it reaches a certain price. Price goes us, demand goes down, therefore the demand curve is downsloping in relationship to the increasing price. What condition must exist to make a demand curve accurate? What condition must exist to make a demand curve accurate? The condition is that the demand curve can only be accurate as long as there are no changes other than price that could affect the consumer’s decision.

    In other words, a demand curve is accurate only as long as the ceteris paribus assumption is true. – You’re WelCUM Why is average revenue curve equal to the demand curve? Why is average revenue curve equal to the demand curve? In normal demand curve, AR is equal to price and so it falls as output increases since the price has to be lowered in order to sell more products. based by: Jocelyn Blink, Ian Dorton, Economics Course companion, Oxford IB What is a demand curve Provide an example of a demand curve in health care How could this example affect the economics of health care?

    What is a demand curve Provide an example of a demand curve in health care How could this example affect the economics of health care? hi my name is sgt. frank blas bamba of the police force and i am teleconsferentcing with dr. Eric cruz bamba and greg tomosyk the demand curve is the need for health and the resources to fit that need when the resources are a at a surplus level dr. paul callahan will come in thank you greg bodner Why the demand curve faced by a perfectly competitive firm is horizontal? Why the demand curve faced by a perfectly competitive firm is horizontal? The firm at perfect competition faces more than one competitor.

    All the firms are price taker and they take the market price as given. If one firm wants to sell its output at a pricehigher than the market price, it will sell nothing as buyers will go to the firm offering lower market price. If one firm wants to sell its output at a lower price, it will take the whole market demand for it. At the market price, determined by interactions between sellers, the firms will sell whatever output it wants. So, the firms determine the price and each firm determines its output. So the demand curve will be horizontal. What is the relationship between the demand curve and demand schedule?

    What is the relationship between the demand curve and demand schedule? Simply put, demand schedule refers to a tabular representation of the quantity of a commodity demanded at various price levels. While demand curve is a graphical representation of the figures in the demand schedule. The curve is usually a line sloping downwards from left to right(except for abnormal demand). Derivation of demand curve from price consumption curve? Derivation of demand curve from price consumption curve? From the question I believe you know what is price consumption curve, so I start from there.

    After maximising utility we find the optimal consumption bundle called the demand functions. These demand functions are functions of prices and income. A price consumption curve is the locus of points that connect the optimal demand functions as any one commodity price changes (ceteris paribus). Now if we remember, a demand curve is a downward sloping line in a Price X Quantity framework of a particular good. And it is clear that from the Price consumption curve that as prices increase we reduce the consumption of that commodity and substitute it with the other goods. In a partial equilibrium framework i. e.

    Price x Quantity framework everything else is held constant, therefore as price of say “Y” increases putting in the demand function we will get that its consumption falls, hence getting a downward sloping DD (demand Curve). Why does a demand curve slope downward from left to right? Why does a demand curve slope downward from left to right? A demand curve slopes downward left to right because the relationship between price and demand is negative – as price drops demand rises. The opposite is true for a supply curve where as price rises supply rises – the relationship is positive so the supply curve slopes upward from left to right.

    Explain why demand curves slope downwards while supply curves slope upwards Mention the exception? Explain why demand curves slope downwards while supply curves slope upwards Mention the exception? Demand curves slope down because as price decreases for goods, demand increases. Supply curves slope upwards because the higher the price, the more goods a supplier wishes to supply to the market. There are two exceptions: 1. When a good is more fashionable at a higher price (like designer jeans) referred to as Veblen Goods. 2. Inferior goods for which there is no cheaper close substitutes referred to Geffen Goods.

    Distinguish between a movement along a given demand curve and a change in demandprovide an example for each? Distinguish between a movement along a given demand curve and a change in demandprovide an example for each? movement along a demand curve is the change in demand due to change in price where as change in demand curve or shift in demand curve is change in demand due to change in income, other products, community geographical area rather than a change in price. What factors shift demand curve? What factors shift demand curve? changes in price of related goods e. g.

    subsitutes and complements change in income e. g. normal goods/inferior goods changes in tastes changes in expectations. Why is the demand curve negatively sloped? Why is the demand curve negatively sloped? The demand curve is negatively sloped to represent the declining marginal utility from consumption. At greater quantities of consumption each additional unit of a good consumed will yield relatively less utility, thereby reducing the marginal willingness to pay for that good. What are the three characteristics of the demand curve? What are the three characteristics of the demand curve?

    Characterstics of demand curve are– 1) It is a curve from left to right 2) It shows the quantity demanded and price of a commodity 3) Higher the price lesser is the quantity demanded and vice-versa How are individual demand curves and market demand curves derived? How are individual demand curves and market demand curves derived? Demand Curves The way I learned it was this. Start with two commodities that you like. Say steaks and chicken breasts. Then draw a graph, with “steaks consumed” on the Y axis and “chicken breasts consumed” on the X axis.

    On this graph, you are going to draw a series of “utility curves”. A utility curve is the set of all combinations of steaks and chicken breastss that give you the same level of satisfaction, or “utility”. For example, 3 steaks and 2 chicken breasts might give you as much satisfaction as 1 steak and 6 chicken breasts. At this point, let’s stop and consider the shape of one of these utility curves. Assuming that you like consuming both steaks and chicken breasts, the more of each you have, the more satisfaction you will get.

    But when we’re drawing a single utility curve, keep in mind that satisfaction must remain constant. So, when you get more of one commodity, you must give up some of the other commodity. So, in general, the utility curve slopes down and to the right (as number of steaks decreases, number of chicken breasts increases. But let’s get more precise about the shape of the utility curve by considering the relationship between the goods. If the two goods were “perfect substitutes” then a consumer will willingly exchange them at a fixed rate no matter how many of each he has.

    Though “perfect substitutes” don’t exist in real life, we can approximate this relationship by considering two very specific goods that are almost identical. For example, “8-oz choice ribeye steaks” and “10-oz choice ribeye steaks”. Most folks would willingly trade 5 8-oz ribeye steaks for 4 10-oz ribeye steaks (perfect substitution does not require a one-for-one trade ratio, but merely a constant trade ratio). Furthermore, no matter how many of each you have, you would still make this trade. In this case, the utility curve is a straight, downward sloping line.

    And at every point on that line, you receive the same amount of satisfaction, or utility. On the other hand, if the goods were “perfect compliments”, then a consumer must consume the two together in fixed ratios. Again, perfect compliments don’t exist in real life, but for an example, we will use “hot dog wieners” and “hot dog buns” (if you combine one of each, you have one hot dog, and we’ll assume, for the sake of approximating a pair of perfect compliments, that neither the weiners nor the buns have any possible use other than hot dogs).

    So now say you have exactly 5 wieners and 5 buns, and that gives you 5 units of satisfaction (or utils). Would you trade one of the wieners for an additional bun? No, because then you have enough wieners for only 4 hot dogs, and you have 2 buns that will not be eaten, and thus will give you no utility. So you would experience a net loss of utility if you made this trade. In fact, if you start with an equal number of weiners and buns, you will not give up any number of wieners for any number of additional buns; nor would you give up any number of buns for any number of additional weiners.

    Now, what if you had 1,000 wieners and still just 5 buns? How much satisfaction would you get from that? Not one bit more than if you had just the original 5 wieners and 5 buns, because you can still only make 5 hot dogs. Same thing for 5 wieners and 1,000 buns. So, in this case, the utility curve starts out as a straight vertical line (at 5 buns and any number of wieners greater than or equal to 5), then turns into a straight horizontal line (at 5 wieners and any number of buns greater than or equal to five). No point on this curve gives you any more or less statisfaction than the combination of 5 wieners and 5 buns.

    Graphs don’t work too well in this forum, but think of the perfect-substitutes utility curve as a backslash ( ), and the perfect-compliments utility curve as a the letter L. These are the two extremes, and neither really occurs in real life. So, for a “normal” pair of goods, that are neither perfect substitutes nor perfect compliments, the utility curve will be somewhere in between the two. It will, of course, still be downward sloping, but the slope will change over the course of the curve, starting out steep, then gradually lessening to nearly flat.

    Going back to the original steaks vs chicken breasts example, this makes sense. There is a saying that “variety is the spice of life”, but this saying is more than just a homily when we’re talking about utility. I don’t care how much you like steak – every now and then, you want chicken. And vice versa. Therefore, most consumers will get more satisfaction from 5 steaks and 5 chicken breasts than from 10 steaks or 10 chicken breasts. Or, keeping satisfaction constant, as you give up steaks for chicken breasts, you will have to get more chicken breasts to compensate for the lack of variety in your diet.

    For example, starting at 5 of each, if you gave up 1 steak (S), you would need 2 chicken breasts (C). So, 4S + 7C gives you the same satisfaction as 5S + 5C. From there, if you gave up another steak, you might need 3 chicken breasts to get the same satisfaction, so 3S + 10C is another point on your utility curve. Let’s extend it on out to 2S + 14C, 1S + 19C, and 0S, 25C. Then we can extend the curve back the other way by giving up chicken breasts for more and more steaks. I can’t draw a graph here, but imagine a curve somewhere in between the ‘ ‘ of perfect substitute and the ‘ L ‘ of perfect compliments.

    Okay, now that we have one utility curve, we can theorize that there are an ifinite number of utitlity curves in this same space, each giving the consumer a different level of satisfaction. Of course, at this point, we have to allow infinite divisibility of the two goods, because every point in this space has to be on one of these utility curves. And now, for the first time, we introduce the notion of “prices”. And the exercise becomes one of maximizing satisfaction with an income constraint. Say you have just $100 dollars to spend, and you want to go out and buy steaks and chicken breasts.

    You will purchase the single combination of steaks and chicken breasts, at the current prices, that puts you on the highest possible utility curve (gives you the most satisfaction). Basically, you will draw a “price line”. Say steaks are $5 and chicken breasts are $4. With $100, you can buy 20 steaks, or 25 chicken breasts, or 4 steaks and 20 chicken breasts, or 8 steaks and 15 chicken breasts, or 12 steaks and 10 chicken breats, or 16 steaks and 5 chicken breasts. Note that this line, unlike the utility curve, is a straight line.

    Note also that you can buy fractions of both steaks and chicken breasts, for example, 14. 1946 steaks and 7. 2568 chicken breasts. Now you want to achieve the highest possible satisfaction. Looking at the utility curves, you will see that there are some curves, with higher utility levels, that do not touch your price line at all, meaning that you simply cannot achieve that much utility with the $100 you have to spend. There are other utility curves, with lower utility levels, that cross your price line twice.

    But there is one and only one utility curve that just touches your price line at a single tangent point. This is the highest utility that you can achieve with your $100. I could quantify this level of utility (the measure is “utils”), but it really doesn’t matter. All that matters is that, for a given income and prices, we have established how many steaks and how many chicken breasts you will purchase. But let’s ignore the chickens and focus on the steaks. How many steaks did you end up buying when they cost $5?

    Well, that depends on the shape of your utility curves, but let’s say you bought 10 steaks. Now we’re going to transfer that quanitity of steaks to a new graph, a demand curve for steaks, with price on the vertical axis and quantity on the horizontal axis. Plot this point, P = $5, Q = 10. Now change the price of steaks to $4 and repeat the utility-maximization exercise in the paragraph above. You will be able to achieve higher satisfaction because of the lower steak price, but again, that is not important. What is important is that you will buy more steaks, say 12 of them.

    And you have another point on your demand curve. Keep changing the price of steaks and repeating the utility maximization exercise until you have a whole set of points on your demand curve (there will actually be an infinite number of points on this curve, but 4-5 will give you enough to see the general shape of the curve. This is how the individual demand curve is derived. (Note that, because there are a lot more commodities out there than just steaks and chicken breasts, economists often generalize the utility curve theory by considering the

    second commodity to be “all other goods”, or some such manipulation. The “problem” of perfect substitutes and perfect compliments goes away when you do this because when the “other commodity” is “everything else”, “everythng else” is neither a perfect substitute nor a perfect compliment. ) Now, how about market demand curves? Well, you just add up all the individual demand curves. Here, it is worth noting that, even if some individual consumer considers two goods to be either perfect substitutes or perfect compliments, other consumers would not necessarily feel the same way.

    So, the market demand curve, even more so than the individual demand curve, is based on the normal, concave-shaped utility curves. That is the best I can do without being able to use graphs. Hope it helps. Market demand curve? Market demand curve? == the market demand curve is the curve related to the demand of the commodity demanded by the group of people to the at different price. == What is an increase in the investment demand curve? What is an increase in the investment demand curve? The interest rate is the thing that primarily affects the investment demand curve and an increase in investment indicates a decrease in real interest rate.

    This makes sense because it is better for borrowers to pay a lower interest rate. Also, better technology can cause the investment demand curve to shift out, also high inventories. If interest rates are expected to be higher in the future, firms will choose to invest now and the lowering of business taxes will result in the investment demand curve to shift outwards. Why is demand curve downward sloping? Why is demand curve downward sloping? The demand curve is downward sloping for 3 reasons: income effect, substitution effect, and the law of diminishing marginal utility.

    Income effect – if a product’s price falls, the purchasing power of a consumer will increase, and therefore, there will be greater quantity demanded at lower prices; the inverse (higher prices—>less quantity demanded) is also true. Substitution effect – if the product price is lower, consumers will shift from purchasing a substitute (a similar product) to buying more of this particular product, therefore, the quantity demanded is higher at lower prices. Diminishing MU – the more additional units a consumer buys of a good, the less marginal utility they receive from it (they are less happy with buying each new one).

    So to make them buy more of what they are already buying, you have to lower the price. Why does the demand curve slope downwards? Why does the demand curve slope downwards? The demand curve is the opposite of the supply curve and it assumes that the cheaper the goods become the more consumers will purchase Demand curve is slope downward because of inverse relationship between price and quantity. The demand curve slopes downwards due to the following reasons (1) Substitution effect: When the price of a commodity falls, it becomes relatively cheaper than other substitute commodities.

    This induces the consumer to substitute the commodity whose price has fallen for other commodities, which have now become relatively expensive. As a result of this substitution effect, the quantity demanded of the commodity, whose price has fallen, rises. (2) Income effect: When the price of a commodity falls, the consumer can buy more quantity of the commodity with his given income, as a result of a fall in the price of the commodity, consumer’s real income or purchasing power increases.

    This increase induces the consumer to buy more of that commodity. This is called income effect. (3) Number of consumers: When price of a commodity is relatively high, only few consumers can afford to buy it, And when its price falls, more numbers of consumers would start buying it because some of those who previously could not afford to buy may now afford to buy it, Thus, when the price of a commodity falls, the number of its consumers increases and this also tends to raise the market demand for the commodity.

    (4) various uses of a commodity (5) law of diminishing marginal utility It is assumed that if all thinngs remain constant once the price of a good decreases you buy more hence the reason for the negative slope dowards of the demand curve What causes a shift in the demand curve? What causes a shift in the demand curve? Economic theory identifies five drivers for change in demand of a given good or service: 1. The number of consumers 2. Price of substitutes and complements 3. Consumer income 4. Tastes and preferences 5. Price expectations

    Each factor leads to a change in demand, modeled graphically as an inward or outward shift of the demand curve. a decrease in the price of a product that is complementary to C. What is the shape of a demand curve? What is the shape of a demand curve? The demand curve is downwards sloping with price on the vertical axis and quantity demanded on the horizontal axis. This is because as products get more expensive the quantity demanded decreases, other things being equal. Put another way, there is a negative correlation between price and quantity demanded.

    What is the difference between change in demand curve and shift in demand curve? What is the difference between change in demand curve and shift in demand curve? Change in demand curve is caused by the change in the price of the product. This is the change that occurs ON THE DEMAND CURVE. The price changes changes the QUANTITY DEMANDED, not the demand curve itself. Shift in demand curve is caused by NON PRICE DEMAND DETERMINANTS. Basically it shifts the ENTIRE curve (right (increase) or left (decrease)).

    Change in income, change in number of consumers, taste and preferences, price of related goods, and future expectations all cause shifts in demand curve. For example, an increase in the number of consumers would shift the demand to the right because demand would increase. A demand curve which is parallel to the vertical axis is? A demand curve which is parallel to the vertical axis is? When the demand curve is horizontal to the x axis, it is said to be elastic and therefore more responsive to changes in price.

    When the demand curve is vertical, it is more inelastic and consumers will be more apt to purchase a good regardless of the price. What are demand schedule and the demand curve? What are demand schedule and the demand curve? A Demand Schedule is a table listing quantities demanded of a good at different prices For Example; Price ($) | Quantity Demanded (Units) 1 10 2 9 3 8 4 7 etc. A Demand Curve displays the information from a Demand Schedule. The Price is on the Y-axis, and the Quantity Demanded is on the X-axis, you just plot the points given , i. e. (10,1) , (9,2) In reality the Demand Curve is an

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