Econ Notes Ch 5

Econ Notes Ch 5 - Elasticity: a measure of the...

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Econ Chapter 4: Elasticity and its Application  23:59 Elasticity:  a measure of the responsiveness of quantity demanded or quantity  supplied to one of its determinants Law of Demand: A fall in the price of a good raises the quantity demanded Price Elasticity of demand : measures how much the quantity demanded  responds substantially to changes in the price Inelastic demand : quantity demanded responds only slightly to changes in  the price Availiability of close substitues: Goods with close substitutes tend to have more elastic demand because it is  easier for consumers to switch from that good to others Butter and margerine Necesities vs. Luxuries Necessities = inelastic demands o People have to go to the doctor no matter what Luxuries = elastic demands o When price of sailboats rises, quantitiy demanded decreases Inelasticity of the good all depends on the preferences of the buyer
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This note was uploaded on 09/22/2009 for the course ECON 1110 taught by Professor Wissink during the Fall '06 term at Cornell.

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Econ Notes Ch 5 - Elasticity: a measure of the...

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