BUS 207 Lecture Notes - Lecture 2: Negative Number, Dependent And Independent Variables, Regression Analysis

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 207
• Professor: Mark Moore

Document Summary

Price elasticity of demand: is the percentage change in quantity demanded (q) divided by the percentage change in price (p). Arc price elasticity: it is an elasticity that uses the average quantity, average price, as the denominators for percentage calculations. ***we can be given an inverse function of the original*** P = 10 - 1/2q we cannot take the derivative of this Q = 20 - 2p we rearranged the question above to isolate q, quantity take derivative. 3 types of linear demand curves: downward-sloping, horizontal, vertical. 3 types of linear demand curves: downward-sloping linear demand curves. Elasticity of demand is a more negative number the higher the price and hence the smaller the quantity: horizontal demand curves. If the price increases, even slightly, demand falls to zero. The demand curve is perfectly elastic: a small increase in price causes an infinite drop in quantity: vertical demand curves: If the price goes up, the quantity demanded is unchanged.