Kinh tế vi mô FTU - Lecture 5

Lecture 5 Elasticities Motivation Oil Price Jump: Winners and Losers Could this jump in oil prices throw a wrench in the gears of the world economy? Bloomberg’s Kathleen Hays reports on “Bloomberg Markets: China Open.” (Source: Bloomberg) 3.1. Price elasticity of demand 3.1.1. Definition 3.1.2. Calculating Price elasticity of demand 3.1.3. Classification 3.1.4. Determinants of price elasticity of demand 3.1.5. Price elasticity of demand and total revenue 3.1.6. The meaning of price elasticity of demand 3.2. Cross-price elasticity of demand 3.2.1. Definition 3.2.2. Calculating Cross-price elasticity of demand 3.2.3. Classification 3.2.4. The meaning of cross – price elasticity 3.3. Income elasticity of demand 3.3.1. Definition 3.3.2. Calculating income elasticity of demand 3.3.3. Classification 3.3.4. The meaning of income elasticity of demand 3.1.1 Definition Elasticity . . . … is a measure of how much buyers and sellers respond to changes in market conditions … allows us to analyze supply and demand with greater precision. Price Elasticity of Demand Price elasticity of demand is the percentage change in quantity demanded given a percent change in the price. It is a measure of how much the quantity demanded of a good responds to a change in the price of that good. It has negative sign because of the law of demand. We only report elasticity in absolute value. 3.1.2 Computing the Price Elasticity of Demand Example