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Chapter 5: Q. 24 (page 130)

What is the formula for elasticity of savings with respect to interest rates?

Short Answer

Expert verified

The formula for the elasticity of savings isE=%∆S%∆I.

Step by step solution

01

Step 1. Elasticity of saving

The ratio of percentage change in saving quantity to percentage change in interest rate is known as elasticity of saving. In the financial market, the elasticity of saving is calculated.

02

Step 2. Formula

This formula can be used to describe the supply curve's shape. The formula is as follows:

Elasticity of saving=%changeinquantitysupply%changeininterestrate

orE=%∆S%∆I

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Most popular questions from this chapter

What is the formula for calculating elasticity?

The equation for a demand curve is P = 48 – 3Q.

What is the elasticity in moving from a quantity of 5 to

a quantity of 6?

If supply is inelastic, will shifts in demand have a larger effect on equilibrium price or on quantity?

From the data in Table 5.5 about demand for smart phones, calculate the price elasticity of demand from: point B to point C, point D to point E, and point G to point H. Classify the elasticity at each point as elastic, inelastic, or unit elastic.

PointsPQ
A603,000
B702,800
C802,600
D902,400
E1002,200
F1102,000
G1201,800
H1301,600

Table 5.5

In a market where the supply curve is perfectly

inelastic, how does an excise tax affect the price paid by

consumers and the quantity bought and sold?
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