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Lecture8--PRICEELASTICITYOFDEMAND

# Lecture8--PRICEELASTICITYOFDEMAND - Course Examination 1...

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Course Examination 1 Course Examination 1 Date: Monday, September 29 Place: Here (Nelson Auditorium) Time: 11:20 a.m. - 12:15 p.m. Coverage: Chapters 1- 6 6 Format: 25 multiple-choice questions Remember to bring a number 2 pencil to the Exam-- Make-ups allowed within one week only with medical or other valid excuse.

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Price Elasticity of Demand A measure of the sensitivity of  changes in quantity demanded to  changes in price of a good or  service
Percentage change in quantity demanded Percentage change in price Q/Q P/P = Ed = = P Q Q P Price Quantity Demanded P Q 0 Calculating Price Elasticity of Demand:

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Categorizing Elasticity of  Demand Demand is inelastic if the value of price  elasticity of demand (ignoring the sign) is  between zero and 1. Demand is unit elastic if the value of price  elasticity of demand (ignoring the sign) is  1. Demand is elastic if the value of price  elasticity of demand (ignoring the sign)  exceeds 1.
Price Quantity Demanded P Q 0 Although slope is constant along a linear demand curve,

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