B200.F08.W07.Eff.GovPol.PowerPoint

B200.F08.W07.Eff.GovPol.PowerPoint - Efficiency &...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Efficiency & Government Policies BUAD 200 Chapters 7,6
Background image of page 1

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

View Full DocumentRight Arrow Icon
Determinants of Price Elasticity of Demand Number & Closeness of Substitutes. Information about price change and availability of substitutes. Percentage of Income Spent on good. Period of time: Second Law of Demand Second Law of Demand : Demand is more elastic over a longer period of time.
Background image of page 2
Other Elasticity's: a Measure of responsiveness of Quantity to a Change in some other factor
Background image of page 3

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

View Full DocumentRight Arrow Icon
Income Elasticity: Measure of responsiveness of Quantity to a Change in Income E dI = % Δ Q d / % Δ income E dI = 100 * ΔQ/Q = I * ΔQ 100 * ΔI/I Q * ΔI Normal Goods: Positive Clothing: .95: 10% income → 9.5% Stereo: 27.2: 10% income → 27.2% Increase may be Quantity or Quality Inferior Goods: Negative
Background image of page 4
Cross Price Elasticity: Measure of responsiveness of Quantity to a Change Price of other good E xy = % Δ Q x / % Δ P y E dI = 100 * ΔQ x /Q x = P y * ΔQ x 100 * ΔP y /P y Q x * ΔP y Substitutes: Positive Complements: Negative
Background image of page 5

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

View Full DocumentRight Arrow Icon
Uses of Cross Price Elasticity Magnitude of cross price elasticity reflects closeness of substitutes or complements Able to identify your closest competitors Courts use cross-price to measure monopoly power
Background image of page 6
Transaction Costs of Exchange Information Costs Search Costs Quality Identification Cost Negotiating Costs : Cost of agreeing on what and how much will be exchanged Transportation Costs : Cost of moving goods between parties
Background image of page 7

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

View Full DocumentRight Arrow Icon
Market Efficiency Chapter 7
Background image of page 8
$ P x $ 10 $ 9 $ 8 $
Background image of page 9

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

View Full DocumentRight Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 35

B200.F08.W07.Eff.GovPol.PowerPoint - Efficiency &...

This preview shows document pages 1 - 10. Sign up to view the full document.

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