Firms and customers III

Materials for class on Tuesday, February 20, 2018



Download the slides from today’s lecture.

First slide

Elasticity of demand

Recall that the simpler version of the formula for elasticity for demand is \(- \frac{\Delta Q}{\Delta P} \times \frac{P}{Q}\). You can see the algebra behind this on the page for class 11.

\[ \begin{align} \varepsilon &= -\frac{\% \text{ change in demand}}{\% \text{ change in price}} = - \frac{\Delta Q}{\Delta P} \times \frac{P}{Q} \end{align} \]