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Elasticity of Demand, Supply, Cross Price, and More
2012 Final Elasticity ProjectFocus Question: How quickly will quantity demanded and quantity supplied respond to a change in prices?Class NotesKrugman Surplus Power Point NotesFormer AP Free Response Questions2019 Set #1 Question #22019 Set #2 Question #22016 Question #12014 Question #32012 Question #22010 (Form B) Question #32009 Question #22006 (Form B) Question #22005 Question #22004 (Form B) Questions # 2 & 32003 Question #2Key Content-
perfectly elastic
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elastic
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unit elastic
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inelastic
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perfectly inelastic
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signs of elasticity- how expensive is the g/s, is it a need or want?,how many substitutes what happend to TR when price changes?
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substitution and income effects
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Factors of Price Elasticity of Demand: Close substitutes, need or want, % of income
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Factors of Price Elasticity of Supply: Availability of Inputs, Time
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cross- price elasticity of demand=% change in quantity of good A demanded/ % change in price of good B
Formulas (remember to ignore the negative sign when calculating elasticity)-
% change in quantity demanded= change in q demanded/original q demanded x 100
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% change in price= change in price / initial price x 100
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Price Elasticity of demand = % change in quantity demanded/ % change in price
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Midpoint Method of price elasticity of demand equals (Q2- Q1)/(Q1 +Q2)/2 DIVIDED BY (P2- P1)/(P1 +P2)/2
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see cross price of elasticity above; know why businesses measure this
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Income Elasticity of Demand= % change in quantity demanded/ % change in income
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Price Elasticity of supply= % change in quantity supplied/ % change in priceIf the elasticity coefficient is less than 1 then the demand is relatively inelasticIf the elasticity coefficient is greater than 1 then the demand is relatively elastic
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If the elasticity coefficient is equal to one then the demand is unit elastic
Helpful WebsitesKhan Academy Consumer Surplus on Youtube http://www.youtube.com/watch?v=_6kwhF6hoqQFlipped Lesson: http://www.youtube.com/watch?v=QLMJDo9dck0Article on elasticity and the I-Pad: http://www.zdnet.com/blog/btl/apple-ipad-and-the-price-elasticity-equation/32753A New York Times Blog on the impact an increase on the price of soda has on the demand for soda http://economix.blogs.nytimes.com/tag/price-elasticity/Price Elasticity and Health Insurance: http://healthcare-economist.com/2010/05/25/estimating-the-elasticity-of-health-insurance-offering-for-firms-part-ii/#more-3763Chinese Gas Prices and Total Surplus http://welkerswikinomics.com/blog/2010/09/29/ah-ha-so-that-explains-the-long-lines-at-the-petrol-stations-around-shanghai-this-weekend/ -
Last Modified on October 29, 2020