ECON 1B03 Lecture Notes - Lecture 7: Broccoli, Demand Curve, Negative Number
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24 Jan 2016
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ECON 1B03 Full Course Notes
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When given a percentage change in price and demand, we use the formula. When given two prices and corresponding demand, we have to calculate the. Ep = % change in qd / % change in p percent change using. % change in qd = (qd2-qd1)/qd1 and % change in p = (p2-p1)/p1. Measure impact on marginal changes in price on qd. Because the curve is linear, the derivative will be constant the slope of the line so. Coefficient will always be a negative number, so we always take the absolute value to focus on the impact of the number measures percentage changes, not slope. Necessities tend to be inelastic ex medicine or required books. Luxuries tend to be elastic ex vacations, tech. Substitute goods are elastic ex coke and pepsi --- demand for eggs is inelastic because it does not have a close substitute.
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