MGEA02H3 Lecture Notes - Lecture 4: Demand Curve, Deadweight Loss, Product Rule

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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 = percentage change in quantity demanded percentage change in price or ed = % qd. how consumers respond to a change in market price. Es = percentage change in quantity supplied percentage change in price or es = % qs. How producers respond to a change in market price. It means that if q = 40 and the price changes by 2%, we expect quantity supplied will change by about 3% It means that if quantity demanded is 80 units 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. Supply is unit(ary) elastic if es = 1.

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