Do you want BuboFlash to help you learning these things? Or do you want to add or correct something? Click here to log in or create user.



#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
economists prefer to use a gauge of sensitivity that does not depend on units of measure. That metric is called elasticity , and it is defined as the ratio of percentage changes. It is a general measure of how sensitive one variable is to any other variable. For example, if some variable y depends on some other variable x in the following function: y = f(x), then the elasticity of y with respect to x is defined to be the percentage change in y divided by the percentage change in x, or %∆y/%∆x. In the case of own-price elasticity of demand , that measure is10
If you want to change selection, open document below and click on "Move attachment"

4.1. Own-Price Elasticity of Demand
ent on price as our measure of sensitivity, we would always need to recall the units in which Q and Pwere measured when we wanted to describe the sensitivity of gasoline demand. That could be cumbersome. Because of this drawback, <span>economists prefer to use a gauge of sensitivity that does not depend on units of measure. That metric is called elasticity , and it is defined as the ratio of percentage changes. It is a general measure of how sensitive one variable is to any other variable. For example, if some variable y depends on some other variable x in the following function: y = f(x), then the elasticity of y with respect to x is defined to be the percentage change in y divided by the percentage change in x, or %∆y/%∆x. In the case of own-price elasticity of demand , that measure is10 Equation (23)  Edpx=%ΔQdx%ΔPx Notice that this measure is independent of the units in which quantity and price are measured. If, for example, when


Summary

statusnot read reprioritisations
last reprioritisation on suggested re-reading day
started reading on finished reading on

Details



Discussion

Do you want to join discussion? Click here to log in or create user.