ECON 262

In Class Group Exercise – The Concept of Elasticity

You own and operate an ice cream truck that drives around neighborhoods selling ice cream.  You have just discovered the concept of “elasticity” and want to use it to help your business. You decide to come up with as many ways of using the concept of elasticity whereas the information might help you make better decisions as the owner of the ice cream truck.

Remember, your ideas have to be operational – meaning that you must come up with variables that are actually measurable.  You are already aware of the price elasticity of demand, income elasticity of demand and cross price elasticity of demand – so you do not want to mention these.  You want to come up with some new ways of using the concept.

1.       Concept:

    Equation:

    Use:

2.       Concept:

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    Use:

3.       Concept:

    Equation:

    Use: