E303lect17F09

E303lect17F09 - September 30, 2008 Reading Baye, Ch 3. pp...

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September 30, 2008 Reading Baye, Ch 3. pp 76-84 (the test will go through p. 84) Exam Wednesday Oct. 7 Problem Set #5 due Friday Note: For those of you interested in working sample multiple choice problems, go to http://highered.mcgraw-hill.com/sites/0072983892/student_view0/ Click on the chapter of interest, and then ‘sample multiple choice problems” Lecture 17 REVIEW___________________________________________________: III. Quantitative Demand Analysis A. Price Elasticity of Demand 3. A Graphical Interpretation of Price Elasticity. 4. Some Observations about Price Elasticity of Demand a. Most demand curves have elastic and inelastic segments b. Exceptions Perfectly Inelastic Perfectly Elastic Constant Elasticity PREVIEW________________________________________________ c. Elasticity and the slope of demand curves. 5. Price Elasticity TR and MR 6. Determinants of price elasticity LECTURE_________________________________________________ c. Elasticity and the slope of demand curves. Given that most curves have elastic, inelastic and unitary elastic segments, it is really not appropriate to talk of ‘inelastic’ or ‘elastic’ demand curves. Nevertheless, economists typically do. An ‘elastic’ demand curve is relatively flat (and thus has a large elastic segment). Similarly, an ‘inelastic’ demand curve is relatively steep (and thus has a large inelastic segment).
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5. Price Elasticity, MR and TR a. Motivation: What can we say about the optimality of prices, given limited
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E303lect17F09 - September 30, 2008 Reading Baye, Ch 3. pp...

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