Lecture6 - Cobb – Douglas ε = -1 (Show) Perfect...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Elasticity
Background image of page 1

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

View Full DocumentRight Arrow Icon
ELASTICITY General Case ( 29 Z W dW dZ W dW Z dZ W W Z Z W Z then W f Z zw = = = = = % % ,... ε Note: Unit Free (Unlike Slope = dZ/dW)
Background image of page 2
ELASTICITY Examples: Own Price Elasticity of Demand Income Elasticity of Demand Cross Price Elasticity of Demand
Background image of page 3

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

View Full DocumentRight Arrow Icon
OWN PRICE ELASTICITY i i i i ii x p p x = ε where i i p x is the slope of the demand curve Demand of Elasticity Unit 1 Demand Inelastic 1 Demand Elastic 1 = < ii ii ii
Background image of page 4
OWN PRICE ELASTICITY ε ii =f(substitutability, time, proportion on income spent on the good,…)
Background image of page 5

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

View Full DocumentRight Arrow Icon
Background image of page 6
Background image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Cobb – Douglas ε = -1 (Show) Perfect Substitutes ε = ? Perfect Complements ε = ? INCOME ELASTICITY OF DEMAND Income Elasticity of demand i i i x M M x . ∂ ∂ = η η i > 0 Normal good η i < 0 Inferior good CROSS PRICE ELASTICITY OF DEMAND Cross Price Elasticity of demand i j i i ij x p p x . ∂ ∂ = ε ε ij > 0 Substitutes ε ij < 0 Complements...
View Full Document

This note was uploaded on 09/21/2011 for the course ECON 1230 taught by Professor Qwe during the Spring '11 term at UC Irvine.

Page1 / 7

Lecture6 - Cobb – Douglas ε = -1 (Show) Perfect...

This preview shows document pages 1 - 7. Sign up to view the full document.

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