ECN 104 Lecture Notes - Lecture 6: Standard-Definition Television, Normal Good, Lifesaving

51 views13 pages

corallion790

17 Oct 2016

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

21-20 for everyone 1%, the quantity demand will go down 0. 2. Problem with standard definition of price elasticity: elasticity from a to b is different that elasticity from b to a. Solution: the midpoint method is a technique for calculating the percentage changes in prices of quantities. E. g. for prices, calculate price changes relative to the average or midpoint, of the staring and final prices. Demand is elastic if the rice elasticity of demand is greater than 1. Demand is inelastic is the price elasticity of demand is less than 1. Demand is unit elastic if the price elasticity of demand is exactly 1. Two extreme cases of price elasticity of demand. Demand is perfectly inelastic when the quantity demanded does not respond at all to changes in the price. When demand is perfectly inelastic, the demand curve is a vertical line. Vertical demanded curve: perfect inelastic curve = 0.

Related Questions

Using the midpoint formula for calculating the elasticity of demand if the price of the good falls from $42 to $38, what would be the elasticity of demand if the quantity demanded changes from:

A. 19 to 21

B. 27 to 33

C. 195 to 205

purplegnat968

interval (or arc) elasticity

cross-price elasticity

price elasticity of demand

elastic demand

income elasticity

inelastic demand

inframarginal units

marginal revenue

point elasticity

price effect

quantity effect

total revenue

unitary elastic demand

1. __________________ A measure of consumersâ sensitivity or responsiveness to changes in the price of a good or service.

2. ___________________ When the percentage change in price (in absolute value) is more than the percentage change in quantity demanded (in absolute value).

3. ___________________ When the percentage change in quantity demanded (in absolute value) is more than the percentage change in price (in absolute value).

4. ___________________ When the percentage change in quantity demanded (in absolute value) is just equal to the percentage change in price (in absolute value).

5. ___________________ Total amount paid to a producer for a good or service P * Q.

6. ___________________ The effect on total revenue of a change in price, holding quantity constant.

7. ___________________ The effect on total revenue of a change in quantity, holding price constant.

8. ___________________ An elasticity calculated over an interval of a demand curve or demand schedule.

9. ___________________ Elasticity at a specific price or point on a demand curve.

10. ___________________ A measure of how responsive quantity demanded is to a change in income, all other things constant.

11. ___________________ A measure showing how responsive the quantity demanded of one good is to changes in the price of another good, other factors constant.

12. ___________________ The additional revenue received by producing and selling one more unit of output.

13. ___________________ Units of output that could have been sold at a higher price had the firm not lowered its price to sell additional (marginal) units.

coffeehornet269

1. What is price elasticity of demand when prices increase from $3 to $4 and quantity decrease from 90 cups to 70 cups?

2. Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:

Price	Quantity Demanded by Business	Quantity Demanded by Vacationers
150	2100	1000
200	2000	800
250	1900	600
300	1800	400

As the price of tickets rises from $200 To $250, what is the price elasticity of demand for a) business travelers and b) vacationers? Use the midpoint method to calculate. Why might vacationers have a diffeent elasticity from business travelers?

3. How can sellers utilize the price elasticity of demand for maximum total revenue?

graybutterfly69

ECN 104 Lecture Notes - Lecture 6: Standard-Definition Television, Normal Good, Lifesaving

Document Summary

Get access

Related Documents

ECN 104 Lecture Notes - Lecture 5: Midpoint Method, Demand Curve, Standard-Definition Television

ECN 104 Lecture Notes - Lecture 6: Midpoint Method, Demand Curve, Standard-Definition Television

ECN 104 Lecture Notes - Lecture 5: Midpoint Method, Demand Curve, Antivenom

Related Questions