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

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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
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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.

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