EC 151 Ch 5 - EC 151 Ch:5 Elasticity and its application...

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Unformatted text preview: EC 151 Ch:5 Elasticity and its application The elasticity of D The elasticity of S Three applications of S, D, and Elasticity The elasticity of D Elasticity P elasticity of D elastic vs. inelastic Determinants of the P elasticity of D availability of close substitutes necessities vs. Luxuries definition of the market time horizon P elasticity of D formula: P elasticity of D = % change in QD % change in P Midpoint method of calculating the % changes and elasticities Examples of P elasticity of D TR & the P elasticity of D Elasticity & TR along linear D curve Other D elasticities The y elasticity of D y elasticity of D = % change in QD % change in y The cross P elasticity of D Cross P elasticity of D = % change in QD of good1 % change in P of good 2 The Elasticity of S P elasticity of S Determinants of the P elasticity of S flexibility in production time : SR S usually less elastic LR S usually more elastic P elasticity of S = % change in QS % change in P Examples of P elasticity of S Three applications of S, D, and Elasticity Farming example OPEC example Drug interdiction and effects on drug related crime ...
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