AREC 202 Lecture Notes - Daimler-Benz Db 600, General Idea, Normal Good
25 Mar 2014
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Divide the difference by the average price (200 100) / 150 = 100 / 150 = 66. 6% If you wanted to reduce the quantity of consumption of 2 goods: Time to adjust allows you to be more responsive to price. In the short run, you are not very responsive to changes in price. In the long run you will demand gasoline much more elastically (buy a new car, carpool, &c. ) Cross price elasticity of demand (% qd of one good) / (% p of another good) If the p of lamborghinis goes from k to k, the qd for gasoline may go from. Let"s say % p lamborghinis = 50% and the % qd gasoline = -20% Negative sign means the 2 goods are compliments. D = (% qd / % income) D = distinction between normal goods and inferior goods.
