Class Lecture #30 - 11/11

Elasticity and Total Revenues
  Total Revenues = P * Q
      - when price goes up, Q goes down
      - when price goes down, Q goes up
      - Example: P goes from $50 - $80 and Q goes from 10 - 4..... is it elastic?
           * TRA = $50 x 10 = $500
           * TRB = $80 x 4 = $320 ...... decrease in total revenue = price change and TR change in opposite          directions = ELASTIC
Income Elasticity of Demand
   - (% change in Q)/(% change in income) ......
        * > 0 = normal good
        * < 0 = inferior good

We also began very preliminary discussions on the law of supply....