Fitch%20-%20Class3%20F10-%20Elasticities

Fitch%20-%20Class3%20F10-%20Elasticities - Chapter 2 Supply...

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Fall 2010 UGBA101A-03 Microeconomic Analysis for Chapter 2 Supply and Demand Slide 1 Business Decisions Class 3 Prof. Todd Fitch
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Chapter 2: Demand and Supply Agenda u Can we predict how prices and quantities change after some change in exogenous variables? u We would like a measure that is not influenced by scale hanges (same measure in pennies and dollars) Chapter 2 Supply and Demand Slide 2 changes (same measure in pennies and dollars) u Understand and discuss short and long run differences u Government intervention u Apply to market for gasoline
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ELASTICITIES OF DEMAND 2.4 u elasticity Percentage change in one variable resulting from a 1-percent increase in another. u price elasticity of demand Percentage change in quantity demanded of a good resulting from a 1-percent increase in its Price Elasticity of Demand Chapter 2 Supply and Demand Slide 3 price.
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2.4 u linear demand curve Demand curve that is a straight line. Linear Demand Curve Linear Demand Curve Figure 2.11 The price elasticity of demand depends not only on the slope of the demand curve but also Chapter 2 Supply and Demand Slide 4 on the price and quantity. The elasticity, therefore, varies along the curve as price and quantity change. Slope is constant for this linear demand curve. Near the top, because price is high and quantity is small, the elasticity is large in magnitude. The elasticity becomes smaller
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This note was uploaded on 11/23/2010 for the course UGBA 101A taught by Professor Mccullough during the Fall '08 term at University of California, Berkeley.

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Fitch%20-%20Class3%20F10-%20Elasticities - Chapter 2 Supply...

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