ECO206Y1 Lecture Notes - Marginal Revenue, Arc Elasticity, Harvest

62 views12 pages
19 Oct 2012
School
Department
Course

Document Summary

Definition: elasticity measures the responsiveness of a change in a variable to the change in another variable. Definition: price elasticity of demand (h ) is equal to the ratio of the percentage change in quantity demanded to the percentage change in price (responsible for that percentage change in quantity demanded) = %d qd/%d p e. g. if a 20% increase in the price of gasoline causes a 10% decrease in the quantity demanded of gasoline, then e = -10%/+20% = -0. 5. I will not use the absolute value expression of elasticity because the sign has significance, particularly in relation to other types of elasticity. => %d qd/%d p < 1 i. e. the percentage response of quantity is less than the percentage change in price: unit elastic. => %d qd/%d p = 1 i. e. the percentage response of quantity equals the percentage change in price: elastic.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related textbook solutions

Related Documents

Related Questions