E303lect20F09

E303lect20F09 - October 8, 2000 Problem Set #6 posted DUE:...

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October 8, 2000 Problem Set #6 posted DUE: Friday. Tests Returned – today or Monday Lecture 20 REVIEW___________________________________________________ PREVIEW___________________________________________________: III. Quantitative Demand Analysis B. Other Demand Elasticities 1. Cross Price Elasticity a. Definition b.Interpretation c. Uses 2. Income Elasticity LECTURE_________________________________________________ B. Other Demand Elasticities . Elasticity is a sensitivity measure that may be of interest with respect to any independent variable. Some other important elasticities can be readily calculated from a demand function. 1. Cross Price Elasticity. The purpose of a cross price elasticity estimate is to capture some sense of the responsiveness of sales for one good to a change in the price of some related good. a. Definition. The cross price elasticity of good x with respect to a change in the price of a related good y is: η XY % Q x /% P y or, decomposing, η XY = ( Q
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E303lect20F09 - October 8, 2000 Problem Set #6 posted DUE:...

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