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OTHER THINGS EQUAL: A common assumption used in economic analysis that often goes by the technical Latin term, ceteris paribus. This assumption is used when identifying the relation between two specific variables, such as price and quantity for the law of demand. In so doing, the causal connection between the two variables can be identified. However, economic analysis becomes more interesting and useful when this assumption is relaxed, which makes it possible to examine how these "other things" affect the relation under study.
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Lesson 11: Elasticity Basics | Unit 3: Measurement
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Page: 14 of 25
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Topic:
Doing The Numbers: Midpoint
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- Our task is to calculate the price elasticity of demand using the midpoint formula.
midpoint
elasticity | = | (Q2 - Q1)
(Q2 + Q1)/2 | ÷ | (P2 - P1)
(P2 + P1)/2 |
- The values for this formula are P1 = $2.49, Q1 = 5,447 tacos, P2 = $1.99, Q2 = 6,608 tacos.
midpoint
elasticity | = | 0.19 ÷ - 0.22 | = | - 0.86 |
- This value - 0.86 indicates that the a one percent decline in the price of Tacos results in a 0.86 percent increase in quantity demanded.
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PRICE TAKER A buyer or seller that has no market control and is not able to affect the price of a good. It must "take" or accept the going market price. The market structure that exemplifies price taker is perfect competition. In fact, perfect competition is the only example of price taker. This is one of two alternatives related to control over price. The other is price maker. Price taker is also termed price seeker.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time searching for rummage sales seeking to buy either an instructional DVD on learning to the play the oboe or a small, foam rubber football. Be on the lookout for celebrities who speak directly to you through your television.
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Much of the $15 million used by the United States to finance the Louisiana Purchase from France was borrowed from European banks.
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"The road to success is always under construction. " -- Lily Tomlin, Actress
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IGARCH
Integrated Generalized Autoregressive Conditional Heteroskedasticity
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