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pam9-4 - -it ewuals the percent change in quantity demanded...

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-shocks may cause movement along, and shifts of, demand and supply curves -predicted direction, but not size, of changes in price, quantity -today, how to measure exact change in price and quantity resulting from shocks -useful for determining how taxes affect P, Q -expected revenue from taxes -whether tax burden falls on consumer or supplier -changes in behavior -why shapes of demand and supply curves matter -elasticities-sensitivity of demand or supply to changes in price, income, or other factors -price elasticity of demand/supply -income elasticity of demand -cross-price elasticity of demand -elasticities in the short run vs. long run -effects of sales taxes -unit -ad valorem -consumers very sensitive to price -price elasticity of demand -succinct way to describe how sensitive consumers are to price
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Unformatted text preview: -it ewuals the percent change in quantity demanded in response to 1% change in price-negative price elasticity is consistend with law of demand-price elasticity varies by where you are (P,Q) on the demand curve-E=(change in Q)/(change in P) x (P/Q)-Qd=a-bP-demand in called inelastic if -1 is less than or equal to E which is less than 0-in percentage terms, quantity changes less than price-demand is called perfectly inelastic if E=0-demand is called elastic if E < -1-in ercentage terms, quantity changes more than price-demand is called perfectly elastic if E = - infinity-in percentage terms, quantity changes exactly as much as price-price high, quantity low, relatively inelastic...
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