ECO 1000 Lecture Notes - Lecture 1: Variable Cost, High School Dropouts, Subsidized Housing
Document Summary
2: consumers v. big business/ anti-trust, artificial shortages. % change in qd < % change in p. Drugs-price could go up/down, doesn"t change demand for product: unitary elastic c. i) perfect competition c. ii)% change in qd = % change in p c. iii) If you raise the price 10% you gain 10% in qd, if you lower 10% you lose 10: determinants of elasticity a. i) number/closeness of substitutes (a. i. 1) The greater the number of substitutes, and the closer the substitutes are, will increase the elasticity of the good and vice versa a. ii)time (a. ii. 1) W/more time, more likely to identify other alternatives or substitutes: extremes of elasticity b. i) perfectly elastic (horizontal) v. perfectly inelastic (vertical) (b. i. 1) Perfectly inelastic- almost possible with addictive goods, change in p does not affect qd: potential problems w/ trusts a. i) allows non-monopolistic firms to act as a monopoly a. ii)competition suffers (a. ii. 1) (a. ii. 2) Blanket until 1998 (a. iii. 1. a) (a. iii. 1. b: reason for govt.
