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Elasticity

Elasticity. ELASTICITY. General Case. Note: Unit Free (Unlike Slope = dZ/dW). ELASTICITY. Examples : Own Price Elasticity of Demand Income Elasticity of D emand Cross Price Elasticity of Demand. OWN PRICE ELASTICITY. where. is the slope of the demand curve. OWN PRICE ELASTICITY.

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Elasticity

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  1. Elasticity

  2. ELASTICITY General Case Note: Unit Free (Unlike Slope = dZ/dW)

  3. ELASTICITY • Examples: Own Price Elasticity of Demand Income Elasticity of Demand Cross Price Elasticity of Demand

  4. OWN PRICE ELASTICITY where is the slope of the demand curve

  5. OWN PRICE ELASTICITY eii=f(substitutability, time, proportion on income spent on the good,…) Cobb – Douglas e = -1 (Show) Perfect Substitutes e = ? Perfect Complements e = ?

  6. INCOME ELASTICITY OF DEMAND Income Elasticity of demand i> 0 Normal good i< 0 Inferior good

  7. CROSS PRICE ELASTICITY OF DEMAND Cross Price Elasticity of demand eij > 0 Substitutes eij < 0 Complements

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