GMS 402 Chapter Notes - Chapter 3: Normal Good, Aspirin, Marginal Cost

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 402
• Professor: Bamidele Adekunle

Document Summary

Gms402 chapter 3 textbook notes (part 1: the elasticity concept, the primary tool used to determine the magnitude of such a change is elasticity analysis. Indeed, the most important concept introduced in this chapter is elasticity. Elasticity is a very general concept: an elasticity measures the responsiveness of one variable to changes in another variable. For example, the elasticity of your grade with respect to studying, denoted eg, s, is the pe(cid:396)(cid:272)e(cid:374)tage (cid:272)ha(cid:374)ge i(cid:374) (cid:455)ou(cid:396) g(cid:396)ade (cid:894)% g(cid:895) that (cid:449)ill (cid:396)esult f(cid:396)o(cid:373) a gi(cid:448)e(cid:374) pe(cid:396)(cid:272)e(cid:374)tage (cid:272)ha(cid:374)ge i(cid:374) the ti(cid:373)e (cid:455)ou spe(cid:374)d stud(cid:455)i(cid:374)g (cid:894)% s(cid:895). If the elasticity is positive, an increase in s leads to an increase in g. If the elasticity is negative, an increase in s leads to a decrease in g: whether the absolute value of the elasticity is greater or less than 1 determines how responsive g is to changes in s.