Lecture 6 - 9/27/2009 Announcements Reading for Today text...

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9/27/2009 1 Announcements ± Reading for Today ± text Chapter 4 pp. 86-101 (84-98 5 th edition) ± Reading for Wednesday ± text Chapter 4 pp. 103-110, Chapter 14 pp. 394-396 th (99-104, 370-372 5 edition) Announcements ± EXAM DATES: Oct 12 (Monday) First Midterm 8-10 PM Nov 9 (Monday) Second Midterm 8-10 PM Dec 14 (Monday) Third Midterm 8-10 PM ± No cell-phones at exams. ± Calculators must be simple non-complex-non-graphing types of calculators. You may not share calculators. ± Come early and bring your photo student ID. ± unit-free measure Price Elasticity of Demand ± price elasticity of demand e d ± measure of sensitivity of quantity demanded to price ± more elastic means more sensitive ± % % Δ Δ Q P ± negative number ± measures movement along demand curve ± mid-point formula, average of P and Q 2 / ) P P ( ) P P ( 2 / ) Q Q ( ) Q Q ( P ) P P ( Q ) Q Q ( 2 1 1 2 2 1 1 2 1 2 1 2 + + = % % Δ Δ Q P = Price Elasticity of Demand ± elastic |e d | > 1 ; |% Δ Q| > |% Δ P| ± inelastic |e d | < 1 ; |% Δ Q| < |% Δ P| % Δ P = -20 % -2 -20 40 = = Δ Δ = % % % % e d P Q 16 20 24 28 32 36 40 Price ($ per unit) D elastic ± unit elastic |e d | = 1 ; |% Δ Q| = |% Δ P| % Δ Q = 40 % 0 4 8 12 0 2 4 6 8 10 12 14 16 18 20 Quantity 2 / ) P P ( ) P P ( 2 / ) Q Q ( ) Q Q ( P ) P P ( Q ) Q Q ( 2 1 1 2 2 1 1 2 1 2 1 2 + + = % % Δ Δ Q P = Price Elasticity of Demand -.5 -20 10 = = Δ Δ = % % % % e d P Q 16 20 24 28 32 36 40 Price ($ per unit) % Δ P = -20 % % Δ Q = 10 % ± elastic |e d | > 1 ; |% Δ Q| > |% Δ P| ± inelastic |e d | < 1 ; |% Δ Q| < |% Δ P| it l ti inelastic 0 4 8 12 0 2 4 6 8 10 12 14 16 18 20 Quantity D ± unit elastic |e d | = 1 ; |% Δ Q| = |% Δ P| 2 / ) P P ( ) P P ( 2 / ) Q Q ( ) Q Q ( P
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This note was uploaded on 03/21/2010 for the course ECON 101 taught by Professor Gerson during the Fall '08 term at University of Michigan.

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Lecture 6 - 9/27/2009 Announcements Reading for Today text...

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