Download Price Elasticity of Demand Between Two Points ε %ΔQ %ΔP

Price Elasticity of Demand Between Two Points Price Elasticity of Demand Between Two Points (Arc Elasticity/Midpoint Method) Price Elasticity of Demand Single Point Elastic Demand Q
%ΔQ
%ΔP
ε
P
Q
P
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P
ε
Q
Q
Q
Q ⁄2
P
P
P
P ⁄2
1
slope
ε
ε
1 Q
Q
P
P
P
Q
Q
Q
P
P
Inelastic Demand ε
1 Unit Elastic Demand ε
1 ε
Income Elasticity of Demand Between Two Points Q
%ΔQ
%ΔI
I
Q
I
Q
I
Income Elasticity of Demand Between Two Points (Arc Elasticity/Midpoint Method) ε
Q
Q
I
I
Q
Q ⁄2
I
I ⁄2
Q
Q
I
I
Q
Q
I
I
Income Elasticity of Demand Single Point ε
1
slope
I
Q
Positive Income Elasticity of Demand Normal Good Negative Income Elasticity of Demand Inferior Good Q
Q
Cross‐Price Elasticity of Demand Between Two Points ε
%ΔQ
%ΔP
Q
P
P
P
Cross‐Price Elasticity of Demand Between Two Points (Arc Elasticity/Midpoint Method) Cross‐Price Elasticity of Demand Single Point Q
Q
P
P
ε
ε
Q
Q ⁄2
P
P ⁄2
Q
Q
P
P
1
slope
P
Q
Q
Q
P
P
Positive Price Elasticity of Demand X and Y are substitutes Negative Price Elasticity of Demand X and Y are complements ε
Price Elasticity of Supply Between Two Points Q
%ΔQ
%ΔP
P
Q
P
Q
P
Price Elasticity of Supply Between Two Points (Arc Elasticity/Midpoint Method) Price Elasticity of Supply Single Point CPI/PriceIndex/In lationIndexinYearYBaseYearB
ε
Q
Q
Q
Q ⁄2
P
P
P
P ⁄2
Q
Q
P
P
1
slope
P
Q
ε
CostofMarketBasketinYearY
CostofMarketBasketinBaseYearB
Q
Q
P
P
ScaleFactor] YearYRealPriceinBaseYearBDollars Inflation Rate (all prices/overall) Inflation Rate (one good) NominalPriceinYearY
CPIinYearYBaseYearB
CPI
CPI
100 Price
Price
Price
I
Budget Line CPI
ScaleFactor] 100 P X P Y or I
P
Y
X P
P
Marginal Rate of Substitution MU
MU
or slopeofanindifferencecurveonanX‐Ygraph MU
P
MU
P
Maximizing Utility (Optimal Consumption) P
P
MU
P
⋯ or MU
MU
Profit Maximizing Quantity P = MC Break‐Even Price ATC = MC Shutdown Price AVC = MC Profit (with perfect competition) ∗
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