ECON 102 Lecture Notes - Lecture 16: Midpoint Method

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cerisegiraffe538

27 Mar 2018

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Total revenue of e_d: if e_d>1 and price is going up then . Total revenue is going down: total expenditure: px q, if e_d<1 and price is going up then . Total revenue is going up: d_illegal drugs is inelastic=e_d<1, inelastic means steeper slope, price goes up then q goes up, total spending going up if we interdiction. D goes down, s=p down, q down. Total spending down if we use education. Price elasticity = % change in q/ % change in p. Can use midpoint method to find e_s. Recall: flatter slope = higher elastic s and sloper s = less elastic s. % change in q_s/ % change in p < 1 = % change in q_s, % change in p. Price elasticity of supply = % change in q/ % change in p. Elastic supply e_s >1 so % change in q_s > % change in p.

Related Questions

Bob of Bob's Burgers used to charge $2.50 for a certain hamburger and sold 4000 units. When he increased the price by $1, he sold 2800 units. Calculate the hamburger's price elasticity of demand.

Bob's total revenue goes _____ as a result of the price change described in the previous question because demand for the burger is relatively _______ with respect to price.

A. up;elastic,

B. down; elastic,

C. up; inelastic,

D. down; inelastic

E. none of the above

byzantiumotter67

interval (or arc) elasticity

cross-price elasticity

price elasticity of demand

elastic demand

income elasticity

inelastic demand

inframarginal units

marginal revenue

point elasticity

price effect

quantity effect

total revenue

unitary elastic demand

1. __________________ A measure of consumersâ sensitivity or responsiveness to changes in the price of a good or service.

2. ___________________ When the percentage change in price (in absolute value) is more than the percentage change in quantity demanded (in absolute value).

3. ___________________ When the percentage change in quantity demanded (in absolute value) is more than the percentage change in price (in absolute value).

4. ___________________ When the percentage change in quantity demanded (in absolute value) is just equal to the percentage change in price (in absolute value).

5. ___________________ Total amount paid to a producer for a good or service P * Q.

6. ___________________ The effect on total revenue of a change in price, holding quantity constant.

7. ___________________ The effect on total revenue of a change in quantity, holding price constant.

8. ___________________ An elasticity calculated over an interval of a demand curve or demand schedule.

9. ___________________ Elasticity at a specific price or point on a demand curve.

10. ___________________ A measure of how responsive quantity demanded is to a change in income, all other things constant.

11. ___________________ A measure showing how responsive the quantity demanded of one good is to changes in the price of another good, other factors constant.

12. ___________________ The additional revenue received by producing and selling one more unit of output.

13. ___________________ Units of output that could have been sold at a higher price had the firm not lowered its price to sell additional (marginal) units.