ECON 101 2Midtermreview

The formula for calculating the cross elasticity is

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

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

Unformatted text preview: y of demand by observing the change in total revenue that results from a price change (when all other influences on the quantity sold remain the same). If a price cut increases total revenue, demand is elastic. If a price cut decreases total revenue, demand is inelastic. If a price cut leaves total revenue unchanged, demand is unit elastic. The Factors That Influence the Elasticity of Demand The elasticity of demand for a good depends on: The closeness of substitutes The proportion of income spent on the good The time elapsed since a price change Cross Elasticity of Demand • The cross elasticity of demand is a measure of the responsiveness of demand for a good to a change in the price of a substitute or a complement, other things remaining the same. • The formula for calculating the cross elasticity...
View Full Document

This note was uploaded on 03/29/2014 for the course ECON 101 taught by Professor Vanderwaal during the Spring '08 term at Waterloo.

Ask a homework question - tutors are online