E303lect18F09

E303lect18F09 - October 2 2009 Reading Baye Ch 3 pp...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
October 2, 2009 Reading Baye, Ch 3. pp 76-84 (the test will go through p. 84) Exam Wednesday Oct. 8 Collect Problem Set #5 MONDAY Lecture 18 REVIEW___________________________________________________: III. Quantitative Demand Analysis 4. Some Observations about price elasticity . c. Elasticity and the slope of demand curves. 5. Elasticity TR and MR a. MR is the difference between the price and quantity box, η is the ratio. Thus MR>0 implies | |>1, MR<0 implies | |<1 and MR=0 implies | |=1. b. Profit maximizing behavior and elasticity - No profit maximizing firm will price on the inelastic part of demand. Rather, they will raise price. - Reducing price on the elastic portion of demand will raise TR, but the effects on profits cannot be discerned without price information. PREVIEW________________________________________________ 6. Determinants of price elasticity a. Determinants Availability of Close Substitutes Price relative to income Time b. Applications
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/12/2010 for the course ECON 303 taught by Professor Shrestha during the Fall '08 term at VCU.

Page1 / 3

E303lect18F09 - October 2 2009 Reading Baye Ch 3 pp...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online