Week%204%20Edited%20Session%202%202009

Week%204%20Edited%20Session%202%202009 - Microeconomics 1...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Diane Enahoro Session 2 2009 1 Microeconomics 1 Econ 1101 Week 4: Groups A and B Elasticity Text: Ch 4, start Ch 5 Outline: The first 30 minutes of this lecture will be a workshop on how to write a short answer 1. Price Elasticity of Demand – Definition and Measurement 2. Calculation – Point and Arc Elasticity 3. Elasticity and the Slope of the Demand Curve 4. Determinants of Elasticity 5. Elasticity and Revenue/Expenditure 6. Other Types of Elasticity of Demand 7. Elasticity of Supply
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Diane Enahoro Session 2 2009 2 Who needs to know about elasticity and why? 1. Governments i. for tax policy ii. pricing of public utilities 2. Businesses i. Pricing policies ii. Investment opportunities Can you think of any others?
Background image of page 2
Diane Enahoro Session 2 2009 3 Elasticity: Definition: A measure of the responsiveness of one variable to changes in another. Price Elasticity of Demand for a good/service is the percentage change in the quantity demanded of that good/service that results from a one- percent change in its price. E = % Δ Qx % Px Elasticity of demand is negative but we use the absolute value of elasticity.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Diane Enahoro Session 2 2009 4 Calculating Price Elasticity of Demand 1. Arc (average or mid-point) elasticity Assume a linear relation ship with two price and quantity observations.
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 20

Week%204%20Edited%20Session%202%202009 - Microeconomics 1...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online