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MACROECONOMICS: The branch of economics that studies the entire economy, especially such topics as aggregate production, unemployment, inflation, and business cycles. It can be thought of as the study of the economic forest, as compared to microeconomics, which is study of the economic trees.
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Lesson 11: Elasticity Basics | Unit 3: Measurement
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Page: 13 of 25
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Topic:
Doing The Numbers: Endpoint
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- Our task is to calculated the price elasticity of demand using the endpoint formula. I am presenting the endpoint formula for reference.
endpoint
elasticity | = | (Q2 - Q1)
Q1 | ÷ | (P2 - P1)
P1 |
- Suppose the values for this formula are P1 = $2.49, Q1 = 5,447 unit of a given good (say Tacos), P2 = $1.99, Q2 = 6,608 units of Tacos
endpoint
elasticity | = | 0.21 ÷ - 0.20 | = | - 1.05 |
- This value - 1.05 indicates that the a one percent decline in the price of Tacos results in a 1.05 percent increase in quantity demanded.
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SCREENING When confronted by asymmetric information, the use of small bits of information, or indicators, that suggest more comprehensive information. Screening occurs when those with limited information try to identify indicators suggesting more complete information. It is used in markets with adverse selection and moral hazard, especially in labor markets and in the provision of insurance. Common methods of screening include aptitude tests, affiliations, past behavior, and personal characteristics. A related method is signalling.
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time driving to a factory outlet trying to buy either a coffee cup commemorating last Friday (you know why) or a wall poster commemorating the first day of spring. Be on the lookout for mail order catalogs with hidden messages.
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This isn't me! What am I?
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Rosemary, long associated with remembrance, was worn as wreaths by students in ancient Greece during exams.
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"It is not fair to ask of others what you are unwilling to do yourself. " -- Eleanor Roosevelt, diplomat, activist
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EEO
Equal Employment Opportunity
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