ECON 1100 Lecture Notes - Lecture 6: Normal Good, Excise, Multiple Choice
30 Sep 2015
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Eta formula is missing the negative in the textbook. If q2 q1 is neg then p2 p1 is positive and vice versa. Even if slope is constant elasticity is not constant. If above the midpoint the percentage change in quantity outweighs the percentage change in price. Determinants of elasticity of demand: availability of subs, ex. Medication, fast food: commodities are somewhat elastic like cigarettes, short run or long run, response to price changes will tend to be greater the longer the time span. % change in quantity demanded dominate the % price. =1 > % change in q demanded equal % change in p > total rev neither up nor down. <1 > % change in q demanded less than % change in price > total rev (tr) down. 6, 30 > elasticity is equal to 1 (midpoint or eta) Measure the responsiveness of the q supplied toa change in the produces own price.
