computation equations

computation equations - Computing the Price Elasticity of...

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Standard method % change in quantity demanded ------------------------------------------- % change in price Midpoint method (Q1-Q2) / [(Q2+Q1)/2] ------------------------------ (P1-P2) / [(P2+P1)/2] The Income Elasticity of Demand % change in quantity demand ---------------------------------------- % change in income Normal goods = positive income elasticity Inferior goods = negative income elasticity The Cross Price Elasticity of Demand % change in quantity demand of good 1 ---------------------------------------- % change in price of good 2 Substitutes = positive income elasticity Complements = negative income elasticity ---------------------------------------------------------------------------------------------------- ------- GDP = consumption + investment + government purchases + net exports = C + I + G + NX Nominal GDP (price is not fixed) = the production of goods valued at current prices. Real GDP
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computation equations - Computing the Price Elasticity of...

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