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ECO 100Y1- LA#3-Class Note- 20110926.docx

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Department
Economics
Course
ECO101H1
Professor
W.G.Wolfson
Semester
Fall

Description
Lecture Assignment #3- Elasticity – 20110926 ∑ (Percentage change) If >1 = elastic If <1= inelastic Example 1: ∑ 20%/10% = 2 : meaning >1 = elastic Example 2: ∑ 10%/20%= 0.5: meaning <1= inelastic ∑d= Price elasticity of Demand ∑s= price elasticity of supply ∑I= income of demand elasticity ∑x/y= Cross Price Elasticity 1) ∑D Price Elasticity of Demand - ∑d= (-) % Qxd/% Px= (-) % Q/ % P - Why? Because as price Increase, Qd decreases = negative relationship - 2) Relationship between ∑d and TR 3) ∑d= (-) % Q/ % P a. N D 4) TR= P x QAs price Increase ∑d TR Type N>D >1 ↓ Elastic N=D =1 No change Unit Elastic N
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