ECO101H1 Lecture Notes - Lecture 5: Microsoft Powerpoint, Sunscreen, Midpoint Method
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ECO101H1 Full Course Notes
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Eco100y1 lecture #5 topic 3: elasticity and its applications i. Elasticity: numerical measure of responsiveness of qd or qs to one of its determinants. Ex. can measure how much demand for websites will fall if you raise your price. Take the absolute value, we know they"re inversely related so just keep the ratio positive because we already know the direction of the movement. Note: along a d curve, p and q move in opposite directions. Standard method: end value start value start value. Demand for websites: price increases from per website to , demand increases from 12 / month to 8 / month. From first point to second: p 25%, q 33% (because. From second point to first: p 20%, q 50%, elasticity = There are different answers because the reference point has changed. Midpoint number halfway between both values, average. We get the same answer no matter which point we start at!