L10X-elasticity 2 jpw - Elasticity Measures - 2 Lecture 10...

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microL10-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Elasticity Measures - 2 Lecture 10 Jennifer P. Wissink ©2009 John M. Abowd and Jennifer P. Wissink, all rights reserved. September 29, 2009
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microL10-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Announcements F09 This week: Chapters 5 and start 6 QUIZ #4-econ1110-F09 is due Thursday night. Review Quiz#5-econ1110-F09 will be due Tuesday or Wednesday next week. Don’t forget to DO: WISSINK OLD TRADITIONAL PROBLEM SETS! Go to the Web for prelim 1 info and SAMPLE exams, etc….
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microL10-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Definition: Own Price Elasticity of Demand P = Current own price of the good. Q = Quantity demanded at that price. P = Small change in the current price. Q = Resulting change in quantity demanded. Price in Change Percentage Demanded Quantity in Change Percentage , = X P X D η
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microL10-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Definition: Own Price Elasticity of Supply P = Current own price of the good. Q = Quantity supplied at that price. P = Small change in the current price. Q = Resulting change in quantity supplied. Price in Change Percentage Supplied Quantity in Change Percentage X P X, S = η
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microL10-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Estimation of Elasticity LET’S STICK TO DEMAND ONLY FOR NOW! How does one calculate an elasticity? Depends on the accuracy you want and info you’ve got. Arc Formula: an approximation using sets of data » Abowd’s Symmetric Midpoint Formula used with tables of data » Typical Textbook Midpoint Formula Point Formula: an exact measure, used when we have the demand function and its slope.
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http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Example: Own Price Demand Elasticity Calculation via Abowd Symmetric Midpoint Method Goal: Approximate the elasticity at point A using B and C Choose point B as (P=38, Q=11) Choose point C as (P=34, Q=13). Linear Demand Curve
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L10X-elasticity 2 jpw - Elasticity Measures - 2 Lecture 10...

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