Elasticities

Martin Kolmar and Magnus Hoffmann
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Martin Kolmar: University of St. Gallen

Chapter 13 in Workbook for Principles of Microeconomics, 2018, pp 221-242 from Springer

Abstract: 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

Date: 2018
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DOI: 10.1007/978-3-319-62662-8_13

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