Changes

== Review: Elasticity ==

== Review: Elasticity ==

In Lecture 3 we learned about "elasticity".  Let's define it again:  '''''elasticity is the responsiveness in demand for a particular good due to changes in a variable such price or income'''''.<ref>There is also an elasticity '''''of supply''''' of a particular good that we'll mention below.</ref>

In Lecture Three we learned about "elasticity".  Let's define it again:  '''''elasticity is the responsiveness in demand for a particular good due to changes in a variable such price or income'''''.<ref>There is also an elasticity '''''of supply''''' of a particular good that we'll mention below.</ref>

The concept of elasticity is worth learning well.  Many questions on an economics exam (such as the CLEP) ask about elasticity.  If you can know elasticity inside and out then you'll have a big advantage on an economics exam.

The concept of elasticity is worth learning well.  Many questions on an economics exam (such as the CLEP) ask about elasticity.  If you can know elasticity inside and out then you'll have a big advantage on an economics exam.

*income elasticity of demand

*income elasticity of demand

Keep these different types of elasticity separate: price elasticity is the change in demand due to a change in the price of the good, while income elasticity is the change in demand due to a change in the income of the buyer.  Your own teacher made the mistake of confusing these different concepts in the question 4 of the homework for Lecture 3, as explained below.  Once he realized his error, he won't make that mistake again!

Keep these different types of elasticity separate: price elasticity is the change in demand due to a change in the price of the good, while income elasticity is the change in demand due to a change in the income of the buyer.  Your own teacher made the mistake of confusing these different concepts in the Question 4 of the homework for Lecture Three, as explained below.  Once he realized his error, he won't make that mistake again!

=== Price Elasticity ===

=== Price Elasticity ===