microbook_3e-page46 - measurement x For example if the...

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Shape of the Supply Curve x When prices change, change in quantity supplied depends on shape of supply curve x Producer 1 has a very elastic supply curve x Producer 2 has a very inelastic supply curve x Elasticity often depends on the good in question: o Elastic : soft drink vendors on a hot day at the beach o Inelastic : housing, labor slope can be misleading x Slope can be misleading because it depends on the units of
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Unformatted text preview: measurement x For example, if the price of a British Pound is 2 U.S. Dollars per British Pound, then the demand curve for milk is twice as steep if measured in dollars instead of pounds x If we focus on a ratio of percentage changes, we can eliminate the confusion caused by differences in the units of measurement Page 46...
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