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Colorado State University
Agriculture + Resrce Econ
AREC 202
Christopher Goemans

12 October What is consumer surplus? Net benefits of consumption for all units consumed NB: Total value (Max WTP) for units purchased minus what you actually needed to pay High likelihood of another question like this on the next midterm Elasticity Flexibility of demand or supply Own price elasticity of demand The amount that quantity changes given changes in price (% Δ Q D / (% Δ P) Goods with elastic demand (own price elasticity of D) Recreation equipment Airplane tickets Movies Characterized as luxuries Goods with inelastic demand (own price elasticity of D) Food Housing Medication Necessities EPD = Own price elasticity of demand EPD = (% Δ Q) / (% Δ P) Let’s say if P of cigarettes goes up 20%, Q Df cigarettes goes down by 8% What would be the own price elasticity of demand for cigarettes? D EP = -.4 No %, they cancel in the equation So it is u
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