Econ 1 test - Chapter 20 Elasticity of Demand = Percentage...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 20 Elasticity of Demand = Percentage of change of Quantity Demanded or =% Ed ∆QD Percentage of change in Price % P % ∆QD = QD 2 – QD 1 % P = P 2 – P 1 QD 2 + QD 1 P 2 + P 1 2 2 Response Ed > 1 = elastic Ed < 1 = inelastic Ed = 1 = unit elastic Total Revenue = Price X Quantity Max TR = Unit Elastic TR P but not below unit elastic = elastic TR P but not above unit elastic = inelastic TR P NC in Price = unit elastic Cross-Price Elasticity of Demand = Percentage of change in demand for good J + = substitutes Percentage of change in price of good K = compliments Income Elasticity of Demand = Percentage of change in demand for good J
Background image of page 1

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

View Full DocumentRight Arrow Icon
= Inferior Goods Percentage of change in income + = Normal Goods < 0 = Necessity > 0 = Luxury Determinants of Demand 1. How many substitutes there are (More = More Elastic) 2. How well a substitute can replace the good or service under consideration. 3. The importance of the product in the consumer’s total budget 4. The time period under consideration Determinants of Supply 1. Time Perfectly elastic or inelastic curves for demand and supply Chapter 21 Marginal Utility = Change in Total Utility or MU = TU Change in Quantity
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/12/2011 for the course ECON-2203- ECON-2203- taught by Professor Orosco,glenda during the Spring '09 term at Oklahoma State.

Page1 / 6

Econ 1 test - Chapter 20 Elasticity of Demand = Percentage...

This preview shows document pages 1 - 3. Sign up to view the full document.

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