02 - MidTerm Exam - DME

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Soluzione:

Problem 1

1.a) Describe briefly concept or formulation of elasticity.

Elasticity is a parameter that measures how much a function react to a change in one variable, percentage wise.

Let's imagine we have a demand function $q(p)$, where $p$ is the price of the product. Then, elasticity is:

It tells by what percentage the demand changes, by a given percentage change in price.

Esercizio 2

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