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Chapter4 - Chapter 4 Elasticity Elasticity What do you...

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Chapter 4 – Elasticity
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Elasticity What do you think? Could reducing the supply of illegal drugs cause an increase in drug-related burglaries?
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Price Elasticity of Demand Elasticity A measure of the extent to which quantity demanded and quantity supplied respond to variations in price, income, and other factors.
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Price Elasticity of Demand Defined Generally A measure of the responsiveness of the quantity demanded of a good to a change in the price of that good Formally The percentage change in the quantity demanded that results from a 1 percent change in its price
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Price Elasticity of Demand Measuring Price Elasticity of Demand Price in Change Percentage Demanded Quantity in Change Percentage
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Assume The price of pork falls by 2% and the quantity demanded increases by 6% Then the price elasticity of demand for pork is Price Elasticity of Demand 3 % 2 % 6 - = -
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Price Elasticity of Demand Determinants of Price Elasticity of Demand Substitution possibilities Budget share Time
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