Econ Lecture 8 Pegs

Econ Lecture 8 Pegs - Alfred Marshall’s Elasticity •...

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Econ Lecture 8 Pegs / end of test mat. 15:04 Advocate of the living wage – has no effect (economic error) The higher you make the living wage, the smalle labor employed Error – by paying low income a higher wage – they will work harder and be more  productive – and employer is better off Denies the rational self interest of economic theory Almost every econ policy-  involves trade offs Higher wages for some ppl and some unemployment for others Some time to adjust Why is it that all labor unions and eng societies – support raising minimum wage Concern for poor people – who will remain employed and lack of concern for  people who are employed Who makes capital equipment?  o Engineers and labor unions Self interest in engineers and labor unions Wil l increase the demand for labor unions
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Unformatted text preview: Alfred Marshall’s Elasticity • invented elasticity • Income elasticity – p becomes income instead of price – what happens when your income goes up 10 % • Market Share elasticity – q becomes SOM o If we raise the price of a good - what happens to our share of the market Raise your advertising budget by a percent – what happen to the qt demanded • Advertising elasticity – p becomes advtg budget • Cross elasticity – two goods involved – trying to figure out how close are products – substitutable are they – how close are they in product space. Red – losing money Black and Red Market for Illegal goods • Involuntary wealth transfer=robbery • Price Taxonomy of Elasticity Applications of Elasticity Private Sector Public Sector 15:04 15:04...
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This note was uploaded on 01/19/2011 for the course ECON 2005 taught by Professor Zirkle during the Fall '07 term at Virginia Tech.

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Econ Lecture 8 Pegs - Alfred Marshall’s Elasticity •...

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