7Chapter 4: ElasticitySlide 37Elasticity and Total Expenditure±Income Elasticity of DemandzThe percentage by which quantity demanded changes in response to a 1 percent change in income.Chapter 4: ElasticitySlide 38Elasticity and Total Expenditure±Income Elasticity of DemandzNormal Goods²Income elasticity is positivezInferior Goods²Income elasticity is negativeChapter 4: ElasticitySlide 39The Price Elasticity of Supply±Price Elasticity of SupplyzThe percentage change in the quantity supplied that occurs in response to a 1 percent change in price.PPQQsupply ofelasticityPriceΔΔ=⎟⎟⎠⎞⎜⎜⎝⎛⎟⎠⎞⎜⎝⎛=slope
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.