class2 Elasticity and Taxes post

class2 Elasticity and Taxes post - Class 2 Elasticity and...

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lass 2 Class 2 lasticity and Taxes Elasticity and Taxes
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Last Class ± Predict Economic Outcomes using Equilibrium ± Equilibrium as a stable point ± Equilibrium price defines an implicit function se the implicit function to predict changes ± Use the implicit function to predict changes ± Comparative Statics: Qualitative Prediction - Sign of the Change
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Outline of Today ± Use elasticity to summarize information on slope ± Use elasticity to predict: Impact of Supply Shocks pact of Taxes Impact of Taxes ± Discussion: When is “Demand = Supply” a good Assumption?
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Outline of Today ± Use elasticity to summarize information on slope ± Use elasticity to predict: Impact of Supply Shocks pact of Taxes Impact of Taxes ± Discussion: When is “Demand = Supply” a good Assumption?
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Responsiveness Measure conomists often need a measure of responsiveness ± Economists often need a measure of responsiveness ± The slope is not a good measure in general: It depends on the choice of the unit 200 Pennies A large change in uantity in implied x+1 199 Quantity in implied by a small change in price -.5% 50% 2 0 3 Dollars: A large change in uantity in implied + 50% x A Slope of -1 Is this a lot? 2 1 Quantity in implied by a large change in price - 50% D (p) 2 0 3 2 0 3 + 50%
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Responsiveness Measure conomists often need a measure of responsiveness ±
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This note was uploaded on 12/10/2011 for the course ECON 401 taught by Professor Burbidge,john during the Winter '08 term at Waterloo.

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class2 Elasticity and Taxes post - Class 2 Elasticity and...

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