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Economics (213)
ECON-UA 1 (101)
Lecture

Day07
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Department
Economics
Course
ECON-UA 1
Professor
Marc Lieberman
Semester
Fall

Description
Day 7 2202014DEQPD Elasticity is a measure of price sensitivityEx if elasticity is 20 if price goes up by 1 quantity demanded goes down by 2DeterminantsofElasticityBasic Principle The easier it is to substitute other goods for the good in question the more elastic is demand1Nature of Product Necessity or LuxuryaEx movies or theatres E369 Electricity E019DDLuxuries tend to be more elastically demanded than necessities 2Narrowness of DefinitionaNarrowly defined goods are more elastically demanded than broadly defined goods3Time HorizonaDemand is more elastic the longer we wait to measure quantity after the price changein general long run elasticities are greater than short run elasticities4Importance in the Buyers BudgetaDemand is more elastic when the good is an important part of a buyers budgetElasticityandTotalRevenueTRorTotalExpenditureTE
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