ELASTICITY It shows the degree of responsiveness of the change in the one variable due to the change in the quantity of the other variable. Elasticity = Percentage change in the one variable Percentage change in the other variable It is simply a way of quantifying cause of and effect relationship. The concept of elasticity can be used in demand and supply. ELASTICITY OF DEMAND We can study the elasticity of demand under the following categories. Price elasticity
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IN THIS CHAPTER YOU WILL . . . Learn the meaning of the elasticity of demand Examine what determines the elasticity of demand Learn the meaning of the elasticity of supply ELASTICITY ITS AND A P P L I C AT I O N Imagine yourself as a Kansas wheat farmer. Because you earn all your income from selling wheat‚ you devote much effort to making your land as productive as it can be. You monitor weather and soil conditions‚ check your fields for pests and disease‚ and study the latest
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9 – Elasticity and Demand Demand and Elasticity Elasticity is a way to measure the responsiveness of a dependent variable to changes in an independent variable. Elasticity is defined as a ratio of the percentage change in a dependent variable to a percentage change in an independent variable. Elasticity ≡ percentage change of dependent variable Percentage change of independent variable When: Y = f(X) %ΔY E ≡ %ΔX Fal l ’05 © Reynolds 2005 Microeconomics Slide 1 Chapter 9 – Elasticity and Demand
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HOMEWORK ONE 1. What is the numerical value for the elasticity of demand if a price change causes no change in quantity demanded? . What is the numerical value for elasticity of demand if a price change causes no change in total revenue? . What is the elasticity of demand for a vertical demand curve? . What is the elasticity of demand for a horizontal demand curve? . What is the elasticity of demand if a price increase leads to an increase in total
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of prices by the government. By doing so‚ it creates shortage or surplus. Price Ceiling – A maximum price at which a good can be sold. Price Floor – Minimum price buyers are required to pay for a good. Elasticity The price elasticity of demand is computed as the percentage change in quantity demanded divided by the percentage change in price. That is‚ Price elasticity of demand=ED= Percentage change in quantity demand Percentage change in price Where: %▲D > %▲P (1) = Elastic
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What is elasticity? The term elasticity is defined as a way to measure how responsive doe’s quantity demanded or quantity demanded towards its determinants (Mankiw‚ 2008). In this world today‚ every government need revenue or income in order to increase the welfare of citizens and improve the country itself. One of the ways that government use in order to increase their revenue is by taxation. To do so‚ government needs to impose taxes on goods and services. If tax is imposed on a certain good‚ what
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The Market Revolution Many factors contributed to the Market Revolution beginning in 1815 and ending in 1860. These included economic‚ technological‚ and social aspects. Better transportation helped move people‚ materials‚ and manufactured goods from coast to coast. New inventions quickened the development of crops and manufacturing of goods. The country’s cities were growing fast‚ and people moved west in pursuit of cheap land and opportunity. Economically
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2010 Ninth International Conference on Mobile Business / 2010 Ninth Global Mobility Roundtable What factors contributed to the success of Apple’s iPhone? John Laugesen McMaster University‚ DeGroote School of Business Hamilton‚ Ontario CANADA laugesjd@mcmaster.ca Abstract — Unknown to most North American consumers‚ a mobile data and Internet service in Japan called i-mode has been highly successful in that country for the past decade. Unfortunately‚ mobile data services in North America have
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Social factors contributed to the French Revolution of 1789 Although social tensions within France certainly contributed to the revolutionary situation in August 1789 it was not the only contributing factor. Divisions and inequality between‚ as well as within‚ the Three Estates created an atmosphere of disharmony while the influence of the enlightenment and liberal ideas fueled the growing discontent of the Estates toward the government and Louis XVI. However‚ political factors‚ like the undermining
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open dispute between Great Britain and the thirteen original colonies. The focal issue that contributed to the revolution was that the colonists did not feel that they were being treated the way Great Britain ought to treat them. Indeed‚ the colonists expressed many social‚ political‚ and economical grievances that the British unlawfully thrust upon them. Specifically‚ there are several prominent causal factors that led to the American Revolution‚ such as revolutionary women’s roles‚ the Stamp Act‚
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