Class Notes (808,088)
United States (312,905)
AREC 202 (57)
Lecture

# Midpoint formula, elasticity, cross price elasticity of demand, income elasticity of demand

4 Pages
91 Views

School
Department
Agriculture + Resrce Econ
Course
AREC 202
Professor
Christopher Goemans
Semester
Fall

Description
14 October Midpoint formula General idea: When given two points… E.g. P = 100 and P = 200 How much does price change? Divide the difference by the average price (200 – 100) / 150 = 100 / 150 = 66.6% Pop quiz answer P = 5 A PB= 8 Q DA= 1000 Q DB= 600 % Δ Q D 1000 – 600 = 400 1000 + 600 = 1600 / 2 = 800 400 / 800 = 1 /2 % Δ P 5 – 8 = -3 5 + 8 = 13 / 2 = 6.5 -3 / 6.5 .5 / 6.5 = -1.08 D EP asparagus → ~2.2 Gasoline → ~2 Luxury items New cars →~1.2 Cigarettes → ~.4 Necessities Alcohol → ~.05 If you wanted to reduce the quantity of consumption of 2 goods: Good 1: Cigarettes Good 2: Asparagus For which good would a tax be more effective? Asparagus, it is demanded more elastically What determines the elasticity for an item? No close substitutes E.g. cigarettes % of income share Time to adjust allows you to be more responsive to price E.g. gasoline In the short run, you are not very responsive to change
More Less

Related notes for AREC 202

OR

Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Join to view

OR

By registering, I agree to the Terms and Privacy Policies
Just a few more details

So we can recommend you notes for your school.