11-elasticity to consumer theory jpw

11-elasticity to consumer theory jpw - Consumer Theory...

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microL11-S2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Consumer Theory Lecture 11-PREVIEW Dr. Jennifer P. Wissink ©2009 John M. Abowd and Jennifer P. Wissink, all rights reserved. March 1, 2010
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microL11-S2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Own Price Elasticity of Demand and Total Expenditures
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microL11-S2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Elasticity and Total Expenditure with Linear Demand (Graph)
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microL11-S2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Cross-Price Elasticity of Demand Elasticity of demand with respect to the price of a complementary good (cross-price elasticity) This elasticity is negative because as the price of a complementary good rises, the quantity demanded of the good itself falls. Example: software is complementary with computers. When the price of software rises the quantity demanded of computers falls. Elasticity of demand with respect to the price of a substitute good (also a cross-price elasticity) This elasticity is positive because as the price of a substitute good rises, the quantity demanded of the good itself rises. Example: hockey is substitute for basketball. When the price of hockey tickets rises the quantity demanded of basketball tickets rises. Cross-price elasticities quantify effects like these.
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microL11-S2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Cross-Price Elasticity of Demand Definition: Arc Formula: Point Formula:
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microL11-S2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Income Elasticity of Demand The elasticity of demand with respect to a consumer’s income is called the income elasticity. When the
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11-elasticity to consumer theory jpw - Consumer Theory...

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