Price Elasticity of Demand: Gambling, Heroin, Marijuana, Whiskey, Prostitution, and Fish (UMAP)

This module develops the mathematical concept of elasticity, expresses it in terms of logarithmic derivatives, and demonstrates how economists use it in evaluating social policies. The exercises range from routine applications to mathematical problems, followed by directed readings in the professional literature.

Table of Contents:

INTRODUCTION

THE ELASTICITY MEASURES THE RELATIVE RESPONSIVENESS OF A FUNCTION

THE ELASTICITY REPRESENTS A RATIO OF AREAS

DERIVATIVES MAY EASE THE CALCULATION OF THE ELASTICITY

A LOGARITHMIC TRANSFORMATION SIMPLIFIES ESTIMATIONS FROM REAL DATA

SYNOPSIS AND COMMENTS
Mathematical Properties of the Elasticity
Practical Applications of the Elasticity

EXERCISES
First Level: Routine Exercises
Second Level: Mathematical Problems
Third Level: Directed Applied Reading

MODEL EXAMINATION

SOLUTIONS TO ALL THE EXERCISES
First Level: Routine Exercises
Second Level: Mathematical Problems
Third Level: Directed Applied Reading

SOLUTIONS TO THE MODEL EXAMINATION

REFERENCES