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Econ101September19 - Average Percent Change in Price b See...

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Econ 101 September 19, 2007 ELASTICITY: P= Current Price of good Q= Quantity demanded See handout for formula Slope = dP/dQ 1/slope = dQ/dP Elasticity = (P/Q) (1/slope) = (P/Q) (dQ/dP) Price elasticity of demand is always negative, supply always positive I. Elasticities and linear demand a. Elasticity varies along linear demand II. Symmetric Midpoint Formula for Elasticity a. Elasticity = Average Percent Change in Quantity /
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Unformatted text preview: Average Percent Change in Price b. See note card or book for exact formula III. Constant Elasticity Demand Curve a. Kind of looks like 1/X b. Cant have constant elasticity if the curve crosses either axis c. Straight lines when plotted logarithmically i. 1/ slope directly = elasticity ii. Sweet. IV....
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