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ECO5Notes.docx

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Department
Economics
Course
ECO1104
Professor
A L L
Semester
Fall

Description
Chapter 5Missed LecutureNotes From SlidesElasticity measures the degree to wh one variable responds to changes in another variableEconomic Defn of Elasticitymeasure of how much buyers and sellers respond to changes in market conditions price elasticity of demand price elasticity of supplyd Price Elasticity of DemandMeasures how much quantity demanded Q of a good responds to a change in the price of that good PEquationPrice elasticity of demandage d changed in Qage change in PAlong a D curve P and Q move in opposite directions inverse relationshipas price increases quantity decreases which would make price elasticity negativeDrop minus sign and report all elasticity as absolute EgIce Cream increases from 200 to 220 amount bought changes from 10 to 8 cones E Price Elasticity of Demandage change in Qdage change in P10810200220 2 210022 0201 2E1 elastic E1inelastic E1 unit elastic Potentiel Problemprevious forumulaelasticity varies depending on whether price increases or decreasesSoln Midpoint Method Q2dQ1dQ2dQ1d2P2P1P2P12LOOKBRACKETSOnly the addition is divided by 2For Elastic DemandQuantity Demanded responds strongly to changes in price price elasticity of demand is greater than one For Inelastic DemandQuantity Demanded does not respond strongly to changes in price price of elasticity of demand is less than oneWhat determines Elasticity Eg Eggs VS Butter
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