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Unformatted text preview: d ) of chocolate bars is linear. 'Demand Function' 'Inverse Demand Function' Case 1 : Suppose that price changes from $2 to $4. Case 2 : Now, suppose that price changes from $8 to $10. Slope = Econ 251 Fall 2009 Handout 5 09/08/09 4 When the demand curve is linear, it is always the case that _______________________ Below Midpoint: Above Midpoint: At Midpoint: II. Determinants of the priceelasticity of demand: 1. Other things equal: • small proportion of income (budget) ___________________________________ • large proportion of income (budget) ___________________________________ Ex: 2. • Many ______________________ for a good/service _______________________ • Few _______________________ for a good/service ______________________ Ex: 3. • More time b • Less time b Ex: Econ 251 Fall 2009 Handout 5 09/08/09 5 Two Extremes: Q...
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This note was uploaded on 09/27/2009 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue UniversityWest Lafayette.
 Spring '08
 Blanchard
 Microeconomics, Price Elasticity

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