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Elasticities

In: Workbook for Principles of Microeconomics

Author

Listed:
  • Martin Kolmar

    (University of St. Gallen)

  • Magnus Hoffmann

    (University of St. Gallen)

Abstract

1. Elasticities are always independent of the unit of measurement. 2. The point elasticity and the arc elasticity of a linear demand function are always identical. 3. The value of the price elasticity of a demand function $$x(p)=\frac{10}{p}$$ x ( p ) = 10 p always equals 10. 4. The price elasticity of a supply function is influenced by the production functions of the firms supplying in the market. Market research has measured the following market demand function: $$x(p)=1{,}000-300\,p$$ x ( p ) = 1,000 - 300 p . The market supply function is $$y(p)=\alpha+100\,p$$ y ( p ) = α + 100 p , with $$-\frac{1{,}000}{3} 0. 4. The market supply in equilibrium reacts elastically to changes in the price if α

Suggested Citation

  • Martin Kolmar & Magnus Hoffmann, 2018. "Elasticities," Springer Texts in Business and Economics, in: Workbook for Principles of Microeconomics, chapter 13, pages 221-242, Springer.
    • Handle: RePEc:spr:sptchp:978-3-319-62662-8_13
    DOI: 10.1007/978-3-319-62662-8_13
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