Chap004.7 - Elasticity and Total Expenditure Elasticity and...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
7 Chapter 4: Elasticity Slide 37 Elasticity and Total Expenditure ± Income Elasticity of Demand z The percentage by which quantity demanded changes in response to a 1 percent change in income. Chapter 4: Elasticity Slide 38 Elasticity and Total Expenditure ± Income Elasticity of Demand z Normal Goods ² Income elasticity is positive z Inferior Goods ² Income elasticity is negative Chapter 4: Elasticity Slide 39 The Price Elasticity of Supply ± Price Elasticity of Supply z The percentage change in the quantity supplied that occurs in response to a 1 percent change in price. P P Q Q supply of elasticity Price Δ Δ = = slope
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.
Ask a homework question - tutors are online