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Unformatted text preview: C. Quantity restrictions (so some will be left for the following year) -restriction on the quantity that can be sold-MAXIMUM allowable -looks like binding price floor -maximum allowed in a store, etc.-hunting 1. Binding (i.e., effective) 2. Non-binding (i.e., ineffective) 3. Examples D. Elasticity (CHAPTER 6)-in understanding how to run a business-predict how customers reaction will change depending on how prices change -problem is how customer will react 1. Motivation 2. ***Price elasticity of demand a. Definition-elasticity= sensitivity, responsiveness, changeable -sensitive to price= change a lot b. Measure i. Elastic ii. Inelastic iii. Unit elastic c. Determinants i. Number and availability of substitutes ii. Necessity or luxury iii. Proportion of budget spent on good iv. Time III. NEXT TIME A. Finish Chapter 7: “Describing Supply and Demand: Elasticities”...
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This note was uploaded on 02/14/2012 for the course ECON 2030 taught by Professor Bong during the Fall '07 term at LSU.
- Fall '07