9-18 lecture notes

9-18 lecture notes - • Price elasticity of demand o...

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Supply-demand curve works for labor as well, more workers hired when wages are lower If government attempts to intervene and issue a minimum wage than unemployment is created because employers hire less people The key lesson is that there is always someone who pays a price when you try to alleviate economic situations Those being helped will support the government’s actions and those hurt will throw out the government Minimum wage laws are bad If minimum wage is less than equilibrium wage than minimum wage is redundant and would not create unemployment unless the demand for labor drops
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Unformatted text preview: • Price elasticity of demand o %change in Qx/%change in Px= (change Q/(Q1+Q2))/(change P/(P1+P2)) P Q ELASTICITY o 2 o 20 o .33<1 o 4 o 16 o 5/7<1 o 6 o 12 o 7/53>1 o 8 o 8 o 1.4>1 o 10 o 4 o 3>1 • Elasticity is low for necessities, habits, and goods with a lack of substitutes • When your elasticity for a good is low then you end up paying higher prices, therefore, don’t fall in love because your elasticity becomes low • Income elasticity of demand is %D/%I...
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This note was uploaded on 05/16/2008 for the course ECON 0005 taught by Professor Abdullah during the Fall '07 term at Tufts.

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