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Elasticity of demand
- Percentage change in quantity
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Percentage change in price
Elasticity of supply
Percentage change in quantity
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Point elasticity at (P, Q)
a * P/Q
How do you calculate price elasticity
Calculate how much 1% change in price changes the percentage of demand
How do you calculate cross elasticity
- Percentage change in QUANTITY of good 1
Percentage change in the PRICE of good 2
If it is negative, they are complement
If it is positive, they are substitute
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