Presentation2

Presentation2 - Click to edit Master subtitle style 5/12/09...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Click to edit Master subtitle style 5/12/09 MICRO YO! 5/12/09 Price Elasticity of Demand Tells us the responsiveness of consumers in response to price changes Elasitic if Ed>1 Small price changes result in large quantity changes Ed=change in the quant dem of x/change in price of x =change in quant/original quant//change in price/change in price 5/12/09 Elasticity can tell us How a price change affects TR TR=p*q The total amount consumers spend on Q* at p* How changes in supply and demand effect market equilibrium How price change changes quant dem 5/12/09 Determinants Number of substitutes A good with many substitutes will be elastic The time the consumer has to respond The more time the more elastic The proportion of income the good requires The less the proportion of income the more elastic 5/12/09 Price Elasticity of Supply Scarcity determines price Measures responsiveness of the quantity supplied to a price change How changes in supply and demand effect market equilibrium How much a price change will affect quant supp 5/12/09 Determinants Substitu tability More substit utes, more elastic Prices must rise if product 5/12/09 Other elasticities Cross price elasticity of demand...
View Full Document

Page1 / 19

Presentation2 - Click to edit Master subtitle style 5/12/09...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online