Lecture 12

Lecture 12 - changes when incomes changes, ceterus paribus...

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February 9, 2009 If inputs are readily available, then that good has a high price elasticity of supply If inputs are not readily available, then that good has a low price elasticity of supply. As time passes after a price change, producers find it easier to change their production plans, so supply becomes more elastic Cross elasticity of demand – a measure of the extent to which the demand for a good changes when the price of a substitute or complement changes, other things remaining the same CEoD = %change in QD/ %change in price of one of its substitutes or complements this isn’t absolute value so signs are important!!! Income elasticity of demand – a measure of the extent to which the demand for a good
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Unformatted text preview: changes when incomes changes, ceterus paribus %change in QD/ % change income ALLOCATION METHODS AND EFFICIENCY What method is best? Is it efficient? Is it fair? Scarce resources might be allocated by: COMMAND, MARKET PRICE, majority rule, contest, first come first served, sharing equally, lottery, personal characteristics, force Command system allocates resources by the order (command) of someone in authority ex.) if you have a job, most likely someone tells you what to do. Your labor time is allocated to specific tasks by command...
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This note was uploaded on 09/29/2009 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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