MGEA02H3 Lecture Notes - Lecture 4: Lux, Plywood

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MGEA02H3 Full Course Notes
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MGEA02H3 Full Course Notes
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Week 4 elasticity, tax incidence and tax burden. A key characteristic of demand and supply curves! Changes in one variable as another variable changes. Answer is given by the elasticity of supply of tomatoes in ontario. Ed = dq/dp x p/q = (dq / q) / (dp / p) Ed = percentage change in quantity demanded percentage change in price. how consumers respond to a change in market price. Es = percentage change in quantity supplied percentage change in price. How producers respond to a change in market price. Ed = dq/dp x p/q = 1/(-1) x 20/80 = . It means that if p = and the price changes by 4%, we expect that the quantity demanded will change by about 1%. (why about ?) Demand is unit(ary) elastic if ed = 1. Think about relation between consumers" total expenditure on a product and the price that firms charge to customers. (it depends on the elasticity of demand).

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