New answers tagged elasticity
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Is the supply and demand elasticity equal at the equilibrium?
No, the supply and demand elasticity are not always equal at the equilibrium.
Here is an example of a market where the elasticity of demand and supply are not equal at the equilibrium. Suppose the ...
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Is the supply and demand elasticity equal at the equilibrium?
supply & demand elasticities are independent of each other and don't depend on the equilibrium.
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Calculation of simple elasticity problem
If $L(Y,i)$ has a constant elasticity of $-0.2$ then you can write it as:
$$
L(Y,i) = g(Y)i^{-0.2}.
$$
Then for the period 0 and period 1 price levels you have:
$$
P_0 = \frac{M}{g(Y)i_0^{-0.2}} \text{...
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Accepted
MCQ on income and substitution effects
According to me bread can be both normal or inferior given the extent of the income effect. Since substitution effect is always negative, increase in he price of bread reduces its demand. Since its ...
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