# BUS 207 Lecture Notes - Lecture 2: Negative Number, Dependent And Independent Variables, Regression Analysis

by OC2373815

School

Simon Fraser UniversityDepartment

Business AdministrationCourse Code

BUS 207Professor

Mark MooreLecture

2This

**preview**shows pages 1-2. to view the full**7 pages of the document.**BUS 207: Chapter 3

Empirical Methods for Demand Analysis

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Elasticity

Price elasticity of demand: Is the percentage change in quantity demanded (Q) divided by

the percentage change in price (P).

Arc Price Elasticity: It is an elasticity that uses the average quantity, average price, as the

denominators for percentage calculations.

Point Elasticity:

***We can be given an inverse function of the original***

P = 10 - 1/2q ...... We cannot take the derivative of this...

Q = 20 - 2p ...... We rearranged the question above to isolate Q, quantity ... take derivative

SQ/SP = -2

Point Elasticity (WITH CALCULUS)

Elasticity Along the Demand Curve

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3 types of linear demand curves:

1. Downward-sloping

2. Horizontal

3. Vertical

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3 types of linear demand curves:

1. Downward-Sloping Linear Demand Curves

● Elasticity varies along the demand curve.

○ Elasticity of demand is a more negative number the higher the price and hence the

smaller the quantity.

2. Horizontal Demand Curves

● If the price increases, even slightly, demand falls to zero.

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