ACC 333 Lecture Notes - Demand Curve, Plywood, Deadweight Loss

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Week 4 elasticity, tax incidence and tax burden. A key characteristic of demand and supply curves! Changes in one variable as another variable changes. Answer is given by the elasticity of supply of tomatoes in ontario. It means that if p = and the price changes by 4%, we expect that the quantity demanded will change by about 1%. (why about ?) Demand is unit(ary) elastic if ed = 1. Think about relation between consumers" total expenditure on a product and the price that firms charge to customers. (it depends on the elasticity of demand). So, if ed > 1, dte/dp < 0. And if ed < 1, dte/dp > 0. We can see this on a graph of the demand curve as well . Elasticity is different at every different point along a linear demand curve. Thinking about different goods, some have more elastic demands; others have less elastic demands.

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