321_10 - Income Elasticity of demand: Percentage change in...

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ECON 321 Spring 2011: Lecture 10 Chapter 16: Market Demand
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Reminders Exam 1 next Wednesday 2/23 Practice exam materials posted on aplia and Blackboard. Review for Exam, next Monday 2/21 (second half of class) Questions and Answers only – I will not have prepared notes. I will only answer your questions. So come prepared.
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Definitions Market Demand : Sum of all individual demands at a given price Inverse Market Demand : Market price as a function of quantity What the market price would have to be to sell a given quantity (Price) Elasticity of demand: Percentage change in quantity demanded due to a 1% change in price =(Δq / q) / (Δp / p)
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Unformatted text preview: Income Elasticity of demand: Percentage change in quantity demanded due to a 1% change in income. Group Problem Two groups of demand: Graph and provide the formula for market demand. Where does the elasticity of market demand = 1? } , 4 100 max{ } , 200 max{ p q p q o b-=-= Group Problem University football tickets are sold to maximize revenue. There are 100,000 seats. Demand is: 1.Calculate the revenue maximizing price and quantity. What is the elasticity of demand at this point? 2.Redo the problem when demand increases to: p p D 000 , 10 000 , 200 ) (-= p p D 000 , 10 000 , 300 ) (-=...
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321_10 - Income Elasticity of demand: Percentage change in...

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