Elasticity_Handout_pages_1___4

Elasticity_Handout_pages_1___4 - ELASTICITY INFORMATION...

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Unformatted text preview: ELASTICITY INFORMATION EHasticity of Demand 'Iherearetwobasicformflastouse: Basic Rule: APointElasficityCI‘hisgivesthe E>1 Elastic elasticity at a specific price or quantity.),\ E = 1 Unit Elasticity ‘ a E < 1 Inelastic E0» = 4.21.9.1 3(9) = p - - mp) ,y _ I, "d B. batman two prices or Percentdmngeinpnce TheElasfidtywfllalwawheneganve ButmEconochs agnmllbe'ignored. ChamctefisfitsofUnitmasticity:__ E(p)=1 ' 2. Changequanfityifmggeinpficf Forapfldmhrfiuoflhcpflmp: :';.;f:-;--.‘;5;;._:.f'f..- - 3- gm. “(MW Lkamamqmmmfimp W. mum inmlfdmdismehsuc,‘ "an 4- R'(P)-0 Sii'rfym-Eév-fii‘?’ . . . 2. Thcdmdhasnitdquciy‘ = “W3”? "" ‘3‘" oflnelastlgz . wwwifim’l'fif " 1- mmmwmmmm- 3. mmtmafim>LuMifififiém (e-g. milkgasolmemmttes) . bringadeaeascinm.fldemnflisdsdc.¢henm 2. Chmgemquantity<alangeinprioe I . ism- 3- Aspficeinmasegminueases "—-~—-—————-—.__.__,._ Aspu-i‘ee decreases,'l'fldecreases - . 4- RT?) > 0 gamma. sens:me Characteristim ofEIastic: _ 1. Occurs inprotlucts thatare considered _ _ hmaryitemseg.jeweh'y...orwherethereare ‘. substitutes e g difierent brands of soft dunks, "u" snackfoods etc. 1'0me 2. mangemquanuty>amngem1mce 3 Asmeemmases,'1‘Rdemases Reconnnmdreducingplicesifelasucdamnd Asmcedecreases,mmn-eases Rwommmdnochangempnce ' Graphing Demand - Revenue 3? WINDS the demand and revenue fimctiom Pmduas ‘md Elastic“? (using the lame independent variable). relationship» about elasticity. revenue. price. and quantity can be chewed. '7‘ DONOTGRAPHMDEMANDANDW ON ONE GRAPH!!! The function: has different depandsnturiablauothoycnnmtbo mphedon one axis. Dtr) Appmlied C_aictfl_t_l.s. 3ed. TaylovGillisan DomainofDemandandRevenueFlmctiom ' [(3.le . e y.14 Bus Math 148 .. . -_...._......._.._ ., . ‘ . j . '5'10‘ Price Ehslicities In alu- U.S. Emmy mm Ehsticity Ehui: Demands Hank [.52 Electrical engineering produels 1.39 Mechameal engineering products 1.30 Fun-name 1.26 Home vehicles LN Instrument engineenng produets LIO Professional Sen-wees ' 1.09 Transportation senrices 1.03 Melanie Demands. ' Gas. ehcuicily. and mm 0.92 Oil 0.9! Chenficab " 0.89 Beverages {all types) 0.70 Tobacco . 0.61 Po'ad 0.58 Banking and insurance services 0.56 Housing mines 0.55 cm... 0.49 Agricultural and fish producu 0.42 Inaaeeereounx Murmur—aw 'S Given the demand function: 0(9)“? 300 map A. Graph D(p) labeling the mercepts. DO?) 13- R(p)= _ . _____ Him: R(p)=ptive(Qwfiy)=(p) Dun Grath(p)_ [Inveuaehorimmms Ra») infinewi'hsflphofmn n... .....-.... Inelasticity Unit gasticity (set Hp) = 1) Emmy (set E(p) > I) Mrs. Polenzmi 633;: 1°32“; f2?” 137—300 I D. Find theintervals of: Mm ‘ t 0 ' Inelastic“? (57¢t Hp) < I) ,, I A50 [ ~‘—-"3I.}'l'litEl.asl:i(:ity (9:50;) = Ir—Da “L f "fix, a A Graph D(p) labelingmeimemepts. 51mm (sump) >1) DO?) i )flr Him: Rip)=priee(0uanthy)={p) Do» “P = Sfihrmueis 21mm; ' é - mmmmzed" with Uri/7‘ elastasticity. $“""£0575) Gtath(p).[I-lavethehofizmtalaxis 3 5 ' if“; inIheWEfllgnphofDQH g hthedomig 75/5WTR "£4173, m) , decreasesanda ngg a 1 maximum. F F'deasticityyvhmthepricechanges from £1910 50. WW " $29 _ 3: 300’er E = a flow %changeinpnce 15" _ ' $0 ‘ %changeinpriceis b 3w;¢(5“3} 50”” ~11» / 5d 1 " it: _»-‘--""'-’-'-, ,. ' f. P W “.10 20 {55% 2 100 _%changeinquanhty I loo—£007 “Li?” ,é/f 4'7" ya Wit—ET” 2&0 ,_ . z;- 5 ii- 7 4/ r , A?” /. 5 J 5,0 ’53“ “J 15(50): ma _ [50-50 I 39 fi. i9»- " a?" ‘mk , E (lg/0)” MmPolmzani Mgr xi”; 57 d ...
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This note was uploaded on 11/13/2011 for the course ACCT 101 taught by Professor Dontknow during the Spring '08 term at Central Washington University.

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Elasticity_Handout_pages_1___4 - ELASTICITY INFORMATION...

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