Class summary 11/11

Elasticity-Total revenues=PxQ

When P goes up, Q goes down

When P goes down, Q goes up

TR=$50*10=$500

TR=$80*4=$320

Change in TR and change in Price are in opposite direction

Demand is elastic

Income Elasticity of Demand

% change in Quantity demanded/% change in income

>0, normal goods

<0, inferior goods

cross price elasticity

>0 substitute

<0 complements

Cost 1. Action   2. To whom