ECON 201 Lecture Notes - Lecture 14: Peanut Butter

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pinkturtle125

14 Nov 2016

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Elasticity of y with respect to x = % change in y/% change in x. Slope of y with respect to x = change in y/change in x. The elasticity of y with respect to x is the percentage by which y changes if x increases by 1% For supply and demand, bigger slope means smaller elasticity. The elasticity of a curve is closely related to the slope of the curve: they are not the same thing! The slope depends on the units in which we measure x and y. If x and y are measured in different units, the slope will change if we change their units. It is the same regardless of how we measure x and y. Elastic or inelastic elastic if the elasticity is greater than 1 inelastic if the elasticity is less than 1. Unit-elastic if the elasticity is equal to 1. Perfectly elastic if the elasticity is infinity.

Related Questions

The following graph shows the demand for a good. For each of the regions listed in the following table, use the midpoint method to identify if the demand for this good is elastic, (approximately) unit elastic, or inelastic.

Region	Elastic	Inelastic	Unit elastic
Between W and X
Between X and Y
Between Y and Z

True or False: The value of the price elasticity of demand is not equal to the slope of the demand curve.

redjellyfish579

12. When prices are (P1, P2)= (1,2), the consumer demands (X1, X2) = (1,2). When prices are (Q1, Q2) = (2,1), the consumer demands (Y1, Y2) = (2,1). Is this consumer behavior consistent with the Weak Axiom of revealed preference?

13. Prove that elasticity of demand is not constant along a linear demand curve.

14. Prove that expenditure share weighted sum of income elasticities equal 1.

15. Prove that both goods cannot be superior or inferior at the same time.

16. Relate elasticity of demand with different slopes of the demand curve.

17. The equation to the Engel's curve of a commodity is X = 50+2M². Calculate the income elasticity of demand at M=$100. What can you infer about the nature of the commodity?

18. Calculate the own-price elasticity of demand for the demand curve P= 15-3X at prices and compare the outcomes.

a) P=0

b) P=1/8

c) P=3

d) P=15

raspberrygrasshopper609

1. The concept of price elasticity of demand measures:

a. the slope of the demand curve.

b. the number of buyers in a market.

c. the extent to which the demand curve shifts as the result of a price decline.

d. the sensitiveness of quantities demanded to price changes.

2. When the percentage change in price is less than the resulting percentage change in quantity demanded:

a. demand is elastic.

b. demand is inelastic.

c. demand is unit elastic.

d. none of the above.

3. The elasticity of demand:

a. will be the same at each price-quantity combination on a stable demand curve.

b. tends to be elastic in high-price ranges and inelastic in low-price ranges.

c. tends to be inelastic in high-price ranges and elastic in low-price ranges.

d. is infinitely large for a perfectly inelastic demand curve.

4. Suppose that as the price of Y falls from $2.00 to $1.80 the quantity of Y demanded increases from 110 to 121. It can be concluded that the price elasticity of demand is: _______.

5. Total revenue rises as the price of a good increases if price elasticity of demand is:

a. unitary elastic

b. perfectly inelastic.

6. The demand for such products as salt, bread, and electricity tend to be:

a. relatively price elastic.

b. relatively price inelastic.

c. of unit price elasticity.

d. perfectly price elastic.

coffeeelephant81

ECON 201 Lecture Notes - Lecture 14: Peanut Butter

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