MARK3082 Lecture Notes - Lecture 1: Price Discrimination, Reservation Price, Demand Curve
Document Summary
Income elasticity of demand: responsiveness of change in quantity demanded or a product due to a change in income: elasticity formula: ensure that order is consistent, 3 types of elasticity. Inelastic <1: not responsive to change in price. Examples: coffee, bread, milk, butter: unit elastic =1: quantity change is equal to price change, elastic >1: very responsive towards price change. Negative number implies a negative or inverse relationship and positive number implies a positive relationship. Number reflects the relative strength of relationship: the closer it gets to 1 or -1, the stronger the relationship is. 0. 8 correlation value is thus stronger than a 0. 6 correlation value. A linear straight line with the points located exactly on the line reflect a perfect correlation of 1 or -1: regression line is always about prediction to understand a general conclusion about a series of data. Independent variable (x) will affect the dependent variable (y).
