Week5 - 05/11/09 Econ 2005 1 Principles of Microeconomics...

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Unformatted text preview: 05/11/09 Econ 2005 1 Principles of Microeconomics Econ 2005 Week 5 Elasticity 2 Outline Exam 1 this Friday! Experiment 2 Elasticity price elasticity of demand income elasticity of demand and price elasticity of supply Factors that influence the size of elasticities How elasticity affects the incidence of a tax, and who bears its burden? 3 Experiment 2 The effect of a price ceiling Compare results with experiment 1-var 1 How did behavior change? Bidding more quickly Unsatisfied (frustrated) participants Total gains? Who gained from the price ceiling? 4 Ceiling Round 1 5 Ceiling Round 4 6 Supply and Demand and Demand @ $30 = 74 Supply @ $ 30 = 50 Excess Demand = 24 7 Total Gains Max Total Gain in ceiling = 83% Possible Gain w/o Ceiling Why are the Total Gains changing by round even if number of transactions is the same? 8 Floor Round 1 9 Floor Round 4 10 Demand @ $50 = 38 Supply @ $ 50 = 76 Excess Supply = 38 Supply and Demand and 11 Total Gains Max Total Gain w/ Floor = 63% Possible Gain w/o Ceiling...
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This note was uploaded on 03/30/2008 for the course PSYC 2084 taught by Professor Atanaka during the Spring '07 term at Virginia Tech.

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Week5 - 05/11/09 Econ 2005 1 Principles of Microeconomics...

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