ECO101H1 Study Guide - Economic Surplus, Demand Curve
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ECO101H1 Full Course Notes
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%change in price: price elasticity of supply is the measure of responsiveness of price to a change in. Income elasticity of demand is the measure of responsiveness of income to a change in quantity. A decrease in total surplus due to taxes is referred to as welfare loss. Ped= perfectly inelastic or ped=0. Ped= perfectly elastic or inifite ped. Pes= perfectly inelastic or pes=0. Pes= perfectly elastic or inifite pes. Summary of questions to be asked: calculate the point and arc elasticity of demand. Point elasticity of demand = change in q* p. Arc elasticity of demand/mid- point method. [p2- p1]*[p1+p2/2: what would be the incidence of taxation if: The entire burden falls on the producer. The burden is shared equally between the producer and consumer. (general rule: the inelastic party gets most of the burden). Answer: elasiticity is (1/slope) * original price/original q. If slope is more, elasticity is less and if slope is less, elasticity is more.
