{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

# Econ 9-17-07 - Econ 1 Total Revenue and Elasticity a Exmp...

This preview shows pages 1–2. Sign up to view the full content.

Econ 9/17/07 1. Total Revenue and Elasticity a. Exmp Q= 10- P TR= Q*P Price 10 9 8 7 6 5 4 3 2 1 Quantity 0 1 2 3 4 5 6 7 8 9 TR= 0 9 16 21 24 25 24 21 16 9 Exx inf. 9 4 2.3 1.5 1 .67 3/7 .25 1/9 Exx= ΔQ * P P,Q = Final Price, Quantity ΔP Q Slope = ΔP ΔQ b. What this tells us: i. Revenue increases while Exx > 1 ii. Revenue is at it’s peak when Exx=1 iii. Revenue decreases while Exx < 1 c. A perfectly elastic curve has a TR slope = 1 d. A perfectly inelastic curve has an infinite TR slope, dependant on the price paid per item. 2. Other Elasticities a. Cross Price Elasticity i. Exy= %Δ in Qx %ΔQ= ΔQ % Δ in Py Qx ii. If Exy >0 1. Then goods are substitutes iii. If Exy<0 1. Then the goods are compliments iv. If Exy= 0 1. There is no relation in the goods b. Income Elasticity i. Exm= %Δ in Qx = ΔQx * M %Δ in M ΔM Q ii. If Exm >0 1. X is a normal good iii. If Exm <0 1. X is an inferior good 3. Second Law of Demand a. In the Long Run, demand curves are more elastic than in the Short Run

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.

{[ snackBarMessage ]}

### Page1 / 3

Econ 9-17-07 - Econ 1 Total Revenue and Elasticity a Exmp...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online