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outline_6 - B. Other Demand Elasticities 1. cross-price...

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Chapter 6 A. Price Elasticity of Demand 1. Definition 2. Formula (midpoint), calculation 3. Measure Elastic / Inelastic / Unit elastic / Perfectly elastic / Perfectly inelastic 4. Determinants a. Number and availability of substitutes b. Time c. Necessity or luxury d. Definition of the Market e. Proportion of budget spent on good 5. Relationship with total revenue a. Elastic: increase in price increases revenue b. Inelastic: increase in price decreases revenue c. Unite elastic: change in price does not change revenue
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Unformatted text preview: B. Other Demand Elasticities 1. cross-price elasticity of demand a. Definition b. What does the sign indicate? 2. Income elasticity of demand a. Definition b. What does the value indicate? 3. Example: disappearing farm a. price elasticity of demand is low b. income elasticity of demand is low C. Price Elasticity of Supply 1. Definition 2. Determinants: time 3. predict change in price...
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