Demand analysis II

# Demand analysis II - PGP I Term I G 2 G 1 Ordinal utility...

This preview shows pages 1–12. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: PGP I Term I G 2 G 1 Ordinal utility level IC 5 =U 5 IC 4 =U 4 IC 3 =U 3 IC 2 =U 2 IC 1 =U 1 Substitution effect A B C BL 1 BL 2 BL 3 Income effect G 1 G 2 Substitution effect A B C BL 1 BL 2 BL 3 Income effect G 1 G 2 Substitution effect A B C BL 1 BL 2 BL 3 Income effect G 1 G 2 Percentage change in quantity demanded of a good resulting from one percent change in its price Determinants: ◦ Market definition ◦ Close substitutes ◦ Necessities and luxuries ◦ Time horizon (Short run vs. long run) q p p q p p q q / / 1 ; 2 If , if ; , If b a p q p bp a bp q bp bp a q 2 4 4 8 q p |ε| =∞ |ε| =-1 |ε| =0 q=8-2p |ε| >1 |ε| <1 q p q p p q q* p* Infinitely elastic demand Completely inelastic demand Percentage change in quantity demanded of one good resulting from one percent change the prices of the other s complement are goods the if substitute are goods the if / / cross cross 1 2 2 1 2 2 1 1 cross q p p q p p q q...
View Full Document

## This note was uploaded on 03/01/2012 for the course STRATEGY Om121 taught by Professor Abhinavdhar during the Spring '12 term at Harvard.

### Page1 / 17

Demand analysis II - PGP I Term I G 2 G 1 Ordinal utility...

This preview shows document pages 1 - 12. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online