Index I. Introduction   II. Price Elasticity of Demand 1 video   III. Interpreting Elasticity   IV. Graphic Interpreting of Elasticity  V. The Total Revenue Test  3 videos  VI. Determinates of Demand Elasticity VII. Applications VIII. Income Elasticity of Demand 1 video IX. Cross Elasticity of Demand 1 video X. Price Elasticity of Supply XI. Effect on Tax Incidence 3 videos XII. Additional Reading/Listening XIII Ed for College Graduates XV Practice Quizzes & Answers   XV. Practice Quizzes   Return to Economics Internet Library       Please link to, use to educate, Share! 11/18/19
 I. Introduction A. Math Review and Quiz plus Calculus Review for economics from Dr. R. L. Reynolds of Boise St. U. B. Some may want to review supply and demand principles explained in Chapter 4.      Elasticity of demand measures the responsiveness of quantity demanded to changes in price,      income, and price of II. Price elasticity of demand A. Price elasticity of demand measures the effect of price changes on  quantity demanded.  B. Sometimes a price increase causes quantity bought to decrease significantly, other times not much.     1.High airfares for a luxury vacation may cause you to vacation locally.     2.High coffee prices when it is a thought of as a necessity may not change quantity demanded much. C. The more quantity changes because of a price change, the more elastic is demand.      1. Relative change will be measured as a one dollar change at higher prices is not as significant as at lower prices.      2. Percent change is an easy way to measure relative change. D. Elasticity of demand is important because it predicts what may happen to total revenue received when a company      changes the price of a product. E. Elasticity from Samuel L. Baker, Ph.D. of  U. of South Carolina provides problems to help with the understanding of elasticity. F. Elasticity can be measured quantitatively.      1. The Coefficient of elasticity of demand for product x measures its price elasticity.       2. Delta, , means change. G. A demand schedule has more than one elasticity of demand. H. Using one point is called point elasticity while two points is called arc elasticity.  I.  Calculating arc linear price elasticity using a formula.  Unit 1 Review Elasticity measures the effect price changes on quantities purchased III. Interpreting Elasticity of Demand    IV. Graphic Interpreting of Elasticity    A. At the Extremes                       B. Total Revenue derived from a Linear Demand Curve  Please  Share     Elasticity measures reaction to price. Elastic is flat, quantity changes more, Inelastic is steep, quantity changes less. V. The Total Revenue Test      A. When demand is elastic, price and total revenue move in the opposite direction.      B. When demand is inelastic, price and total revenue move in the same direction.      C. Total Revenue Test Video has a  graphic explanation.      D. Welker Video Elasticity &Total Revenue
 Elasticity of Demand and Total Revenue Elasticity When Price Increases Total Revenue ED   >1 Somewhat Elastic Quantity Changing a Lot so a lot of revenue could be lost. Decreases ED = 1 Unitary Elasticity Quantity/Price Changing Same % No Change ED <1 Somewhat Inelastic Quantity Changed Little so a lot of revenue could be gained. Increased Unit 5 R With elastic demand p and TR move in opposite directions, Inelastic the same directionWe need to understand cost  production to understand making a profit.
 VI. Determinates of Demand Elasticity  6 minute video Product Characteristics Elastic Demand Inelastic Demand Number of substitutes Many Few or none % of purchaser's budget High Low Type of good Luxury Necessity, Emergency Desire No hurry Required quickly Examples Steak, Vacations Salt, Bread Unit 6 Review Substitutes, price, necessity or luxury, budgets position determine elasticity
 VII. Applications         A. Various research methods are used to calculate price             elasticity:            1. Test marketing            2. Analysis of historical sales data         B. Example 1             1. Slave Redemption and Elasticity 1             2. Slave Redemption and Elasticity 2         C. Applied Elasticity of Demand 4 min video         D. Selected income elasticity's             1.View a table containing elasticity of demand approximations             2. Income elasticity's are notably stable over time and across countries.             3. Could Price  Elasticith be Increasing? in our more competitive world                     E. Price Elasticity and Government Actions           1. High farm yields for crops with an inelastic demand cause farmers to lose               money as people don't eat a lot more so we have a federal farm program.           2. Excises taxes increase price so the governments puts them on               inelastic goods like tobacco, alcohol, and jewelry.               a. Drugs could be next and profit will be determined by price                    elasticity of demand for drugs (How Inelastic is it?), law                     enforcement savings, and the cost of helping new addicts?               b. Econ Concepts in 60 Seconds Analyzing Excise Tax Practice               c. Why It's Obvious We are losing the war against drugs               d. Elasticity and the Price of Gasoline               e.               f. Price Elasticity of Demand at a Private University What You Should Know About Decision 2020
 VIII. Income elasticity        is the % change in quantity demanded divided by the % change in income.          A. Income elasticity is positive for normal (superior) goods such as steak              and vacations - more is purchased as income increases.          B. Income elasticity is negative for inferior goods such as bread and              hamburger-less is purchased as income increases.           C. In times of recession, income elasticity determines loss in revenue by              producing firms.          D. Selected income elasticity's Wiki         E. Income Elasticity of Demand             1. Income Elasticity of Demand from tutor2u for more information.             2. Example IX. Cross elasticity of demand      is the % change in quantity demanded divided by the % change in the price of a substitute or complement.         A. Cross elasticity is positive for goods that are substitutes (price of hot dogs up, quantity of hamburger sold up).        B. It is negative for goods that are complements (price of hot dogs up, quantity of hot dog rolls sold down).        C Near zero for independent goods (peanuts and grapefruit)        C. Cross Price Elasticity of Demand from tutor2u        D. Income and Cross Elasticity Video from ACDC Econ        E. Low cross-price elasticity of demand means there's no incentive to vote for more California housing 2/19/19        F. Virtual Economy from Buz\ed has an elasticity calculator.       Please Share X. Price elasticity of supply  is the % change in quantity supplied divided by the % change in price.                                                   A. It is a function of how factor costs change as more is produced and the passage of time.         B. If costs (factor prices such as wages and rent) change little as more is offered for sale at higher selling prices             then profit potential is high and supply will be elastic.         C. Supply elasticity also increases with time as companies have more time to adjust to higher costs.             1. Unusually high demand for tomato's or the Chrysler PT Cruiser take time to produce and supply is inelastic.            2. Gateway may be able to increase the number of a new popular model computer quickly and supply is more elastic.        D. Gold production is costly and takes time so price is volatile because of frequent demand changes.        E. Selected supply elasticity's        F. Visit Price elasticity of supply from tutor2u for more information
 XI. Tax Incidence Effects PEDs, in combination with price elasticity of supply (PES), can be used to assess where the incidence (or "burden") of a per-unit tax is falling or to predict where it will fall if the tax is imposed. For example, when demand is perfectly inelastic, by definition consumers have no alternative to purchasing the good or service if the price increases, so the quantity demanded would remain constant. Hence, suppliers can increase the price by the full amount of the tax, and the consumer would end up paying the entirety. In the opposite case, when demand is perfectly elastic, by definition consumers have an infinite ability to switch to alternatives if the price increases, so they would stop buying the good or service in question completely—quantity demanded would fall to zero. As a result, firms cannot pass on any part of the tax by raising prices, so they would be forced to pay all of it themselves.[38] In practice, demand is likely to be only relatively elastic or relatively inelastic, that is, somewhere between the extreme cases of perfect elasticity or inelasticity.  ACDC Videos  Tax Incidence   Taxes on Producers     Excise Tax Practice More generally, then, the higher the elasticity of demand compared to PES, the heavier the burden on producers; conversely, the more inelastic the demand compared to PES, the heavier the burden on consumers. The general principle is that the party (i.e., consumers or producers) that has fewer opportunities to avoid the tax.

 Education Work Health Safety Poverty Civility Taxes Debt Government Decision 2020 Geopolitics Terror Fake News Bottom Line

 Education Work Health Safety Poverty Civility Taxes Debt Government 2020 Election Geopolitics Terror Fake News Bottom Line See How Post WW2  Economics and Politics Affected Our Economic Wellbeing
 Education Health Safety Poverty Civility Taxes Debt Government 2020 Election Geopolitics Terror Fake News Bottom Line

 Wellbeing Government Measurement GDP

Education

Health

Poverty

Civility

Terror

 Education Work Health Safety Poverty Civility Terror Taxes Debt Government Geopolitics Fake News Bottom Line Decision 2020

Index

Wellbeing

Macro

Western Political Economy Since 1843
Post WW 2 US Competitive Adjustments

Post WW 2 International Economic Adjustments
Micro
Most Westerners Live Better Than Ever

Economic History
Post WW 2
Modern Western

Teaching Resources

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 Education Work Health Safety Poverty Civility Terror Taxes Debt Government Geopolitics Fake News Bottom Line Decision 2020

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Theory

Managerial

Post WW2 Political Economy