NU
ECON 1116 -
Divisibility of Goods
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ECON 1116 3 OctoberDivisibility of goods- Have mostly assumed that goods we examine are divisible (can be consumed in fractional amounts)- Gives us continuous curves- If goods aren’t divisible, the demand (or supply) curve is a step function o Piecewise function—but vertical o Demand will be zero until it hits a certain price; demand will be one until in declines to next specified price- If MV or MC of demand is presented in table, assume that the good is not divisible unless told otherwiseElasticities- Focus mostly on price elasticity of demand and price elasticity of supplyo Cross-price and income are mostly irrelevant for the
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