ECON 2030 Chapter Notes - Chapter 5: Price Ceiling, Price Floor, Price Controls
Document Summary
Today"s menu: monday 16 june 2014: business, practice problems, chapter 5: 1, 2, 4, 5, 7, 8, 10, chapter 6: 1-4, 7-10, 12, 14, 18-20, first exam: next time. Substance: price controls, price ceiling: maximum allowable price, binding (i. e. , effective): changes the outcome, non-binding (i. e. , ineffective): has no effect. 8: examples, price floor: minimum allowable price, binding (i. e. , effective, non-binding (i. e. , ineffective, examples, elasticity: responsiveness of behavior of buyers and sellers in response to outside factors. What change in demand does a change in price facilitate: motivation, price elasticity of demand, definition: how sensitive are buyers to a change in price, measure, elastic: reaction is greater than the change in price. 20% increase in price = 100% decrease in demand: inelastic: reaction is less than the change in price. 20% increase in price = 2% decrease in demand: unit elastic: reaction is exactly proportional to the change in price.
