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Economics Lecture Five (view source)

Revision as of 22:52, October 4, 2009

464 bytes removed ,  22:52, October 4, 2009
→‎Income Elasticity: better
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The same cutoff of unit 1 separates "elastic" from "inelastic" goods with respect to income elasticity:
 
The same cutoff of unit 1 separates "elastic" from "inelastic" goods with respect to income elasticity:
   −
{|wikitable
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{| class="wikitable"
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|Yed
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|-
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|Normal or Inferior?
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!Yed
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|Elastic or Inelastic?
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!Normal or Inferior?
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|Necessity or Luxury?
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!Elastic or Inelastic?
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!Necessity or Luxury?
 
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|-
 
|-0.5
 
|-0.5
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|-
 
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Yed = - 0.6: Good is an inferior good but inelastic – a rise in income of 3% would lead to demand falling �by 1.8%
  −
Yed = + 0.4: Good is a normal good but inelastic – �a rise in incomes of 3% would lead to demand rising �by 1.2%
  −
Yed = + 1.6: Good is a normal good and elastic – �a rise in incomes of 3% would lead to demand rising �by 4.8%
  −
Yed = - 2.1: Good is an inferior good and elastic – �a rise in incomes of 3% would lead to a fall in demand of 6.3%
      
=== Cross Elasticity ===
 
=== Cross Elasticity ===
Aschlafly
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