Académique Documents
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AS/ECON1000 3.0
Sections C
MWF, 12:30 – 1:30
Course Outline:
http://dept.econ.yorku.ca
Web site:
www.noordeh.pageout.net
1
Contact Information
Course Director: Professor A. Noordeh
2
Teaching Assistants
1098 Vari Hall
Xiaoyu Sun
• M & R: 8:30 – 11:30
Hui Feng
• W & R: 8:30 – 11:30
Miguel Castro-Lopez
• W, 9:30 – 11:30; R: 2:30 – 4:40 & F: 10:30
– 12:30
Alex Guimaraes
• T, TR 9:30 – 12:30
3
Student Evaluation
Option 1:
– Midterm Exam (40%)
– Final Exam (60%)
Option 2:
– Online Assignments (20%) – Requires “APLIA” online
program (Approx. $35 CAN)
– Midterm Exam (30%)
– Final Exam (50%) – Covers the entire term’s work
4
Midterm Exam
Important Notice
Change Change Change
Two in-class midterm Tests:
Weights:
Option1: 20% each test
Option2: 15% each test
5
Assignments
1. Register with “APLIA”:
http://www.aplia.com
2. Use Course Key:
W7S2-5ZUU-VYE2
3. Payment grace period ends: Sept. 25
4. Assignment due dates
• Assignment 1: October 22, 07
• Assignment 2: November 30, 07
6
Other Important Dates
7
TEXT:
ECONOMICS
Canada in the Global Environment
Sixth Canadian Edition
by
Michael Parkin & Robin Bade
Publisher:
Pearson Addison Wesley
8
Study Guide
by
Avi J. Cohen & Harvey B. King
For
MICROECONOMICS
Canada in the Global Environment
Sixth Canadian Edition
9
Reading/Homework
for
September 17, 19 & 21, 2007
10
Reading/Homework
for
September 24,26 & 28, 2007
11
Elasticity
Chapter 4
12
Objectives
To Understand
–The concept of elasticity
–Price elasticity of demand
–Cross elasticity of demand
–Income elasticity of demand
–Elasticity of supply
–Define, calculate, and explain the factors that
influence the Above
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What is Elasticity?
A measure of degree of
responsiveness of one variable
to change in another
14
Price Elasticity of Demand
An increase in supply
brings a small increase
in the quantity
demanded and a large
fall in price.
Thus, demand is not
very responsive to
change in price.
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Price Elasticity of Demand
An increase in supply
brings a large increase
in the quantity
demanded and a small
fall in price.
Thus demand is very
responsive to
change in price
16
Price Elasticity of Demand
17
Price Elasticity of Demand
% Change in Q
% Change in P
18
Price Elasticity of Demand
19
Price Elasticity of Demand
The price
elasticity of
demand is
(1/5)/(1/20)
= 20/5 = 4.
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Price Elasticity of Demand
21
Price Elasticity of Demand
22
Price Elasticity of Demand
23
Price Elasticity of Demand
24
Price Elasticity of Demand
25
Price Elasticity of Demand
Elasticity
Along a
Straight-Line
Demand
Curve
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Price Elasticity of Demand
Exercise1:
P=25 to P=20
Q=0 to Q=10
E=?
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Price Elasticity of Demand
Exercise 2:
P= 10 to P=5,
Q= 30 to Q 40
E=?
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Price Elasticity of Demand
Exercise3:
P=15 to P=10, and
Q=20 to Q=30
E=?
29
Point Elasticity for a Linear Demand
Curve
Summary of the important implications of the above equation for any linear
demand curve:
The elasticity of demand varies from ∞ at the price intercept
to 0 at the quantity intercept.
The elasticity of demand at the midpoint equals 1.
The demand curve is elastic above the midpoint; that is, εp > 1.
The demand curve is inelastic below the midpoint; that is, εp < 1.
The Elasticity of Demand for a Linear Demand
Curve
31
Price Elasticity of Demand
So, ΔP or Δ Q Δ TR
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Elasticity (E) and Total Revenue (TR)
E > 1:P ↓⇒ TR ↑
E < 1:P ↓⇒ TR ↓
E = 1:P ↑↓⇒ TR
33
Price Elasticity of Demand
The relationship
between elasticity of
demand for pizzas and
the total revenue from
pizzas.
In part a (shown here),
as the price falls from
$25 to $12.50,
demand is elastic, and
total revenue
increases.
34
Price Elasticity of Demand
35
Price Elasticity of Demand
36
Price Elasticity of Demand: The Factors
That Influence the Elasticity of Demand
• The closeness of substitutes
The closer the substitutes, the more elastic are the demand for it.
Necessities & Luxuries
37
More Elasticities of Demand
–The formula:
Percentage change in quantity demanded
Percentage change in price of substitute or
complement
38
More Elasticities of Demand
39
More Elasticities of Demand
40
Price Elasticity of Supply
41
Price Elasticity of Supply
42
Elasticity of Supply
43
Elasticity of Supply: Special Cases
44
Elasticity of Supply
45
END
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