42 - 20:43 another SubstitutesEx: Substitut

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20:43 cross-price elasticity of demand     Percentage change in the quantity  demanded of one good resulting from a 1-percent increase in the price of  another. Substitutes—Ex: Butter and margarine can easily be substituted for each other  so the demand for each depends on the price of the other Substitutes: Positive elasticity (direct) Complements: Negative elasticity (inverse) Increase in the price of one tends to push down the consumption of the other. - point elasticity of demand     Price elasticity at a particular point on the  demand curve. arc elasticity of demand     Price elasticity calculated over a range of prices. Rather than choose either the initial or final price, we use an average of the two 2.5 Demand and Durability: Demand: Ex: Gasoline Short run:  Increase in price = Small effect on Gasoline demanded --May drive less, but you don’t buy a new car over night
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This note was uploaded on 10/26/2010 for the course ECON 203 at USC.

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42 - 20:43 another SubstitutesEx: Substitut

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