Econ 1 - 2nd exam study

Econ 1 - 2nd exam study - 1. Price elasticity of demand...

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1. Price elasticity of demand – units free measure of the responsiveness of the quantity demanded of a good to the change in price of the good. Percentage change in quantity demanded / percentage change in price 2. Percentage change in quantity demanded – change in price/average price 3. Percentage change in price – change in price/average price 4. Inelastic demand – when % change in quantity/ % change in price is between 0 and 1 5. Elastic demand - when % change in quantity/ % change in price is between 1 and infinity 6. Perfect inelasticity of demand – when quantity demanded remains constant no matter the price change, vertical demand curve, elasticity=0 7. Unit elasticity of demand – percentage change in price = percentage change in quantity demanded, hyperbolic demand curve, elasticity =1 8. Perfectly (infinite) elasticity of demand - when quantity demanded infinitely changes to a price change, horizontal demand curve, elasticity=infinity 9. total revenue test – if price cut increases total revenue, demand is elastic; if it decreases
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This note was uploaded on 04/07/2008 for the course GENERAL ED MMW 1,2; E taught by Professor Vandehey during the Spring '08 term at UCSD.

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Econ 1 - 2nd exam study - 1. Price elasticity of demand...

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