As I teach both Economics and Business Studies I can see your point about
the nature of economics as compared to business studies. They appeal to
different types of students.
This question was a one off that was raised by one of my students during a
lesson. We did not dwell on it in class nor have we taught the philosophical
nature of elasticities of supply. I was genuinely interested in the views of
the list so I could answer his question. To this student the question was
very relevant as he did not understand. In my role as teacher I wished to
assist him in his learning and his investigation, before he left in two
weeks time. I could have elected to ignore the issue I suppose, especially
as it will not come up in exam.
----- Original Message -----
From: "Adrian Lyons" <[log in to unmask]>
To: <[log in to unmask]>
Sent: Sunday, May 11, 2003 4:31 PM
Subject: Re: Price Elasiticity of supply
> While recognising the need to encourage student enquiry, independent
> learning and intellectual stimulation, it just occurs to me that this
issue
> is a wonderful example of the reasons for the very sad decline in
Economics
> and its replacement by what is perceived to be the more relevant subject
of
> business studies.
>
> -----Original Message-----
> From: Dave Sowden [SMTP:[log in to unmask]]
> Sent: 11 May 2003 10:30
> To: [log in to unmask]
> Subject: Re: Price Elasiticity of supply
>
> I followed the link Duncan provided and discovered this on page 18
>
> "- the more inelastic is supply - the greater the burden to buyers."
>
> Now I confess I did not follow John's original posting too closely but I
> have always understood that defining tax incidence as Change in
> Price/Change
> in Tax, allows us to deduce that
>
> Tax Incidence = Elasticity of Supply/Elasticity of Supply + Elasticity of
> Demand
>
> Thus as Elasticity of Demand increases, the burden of taxation on the
> consumer decreases. On the other hand as the Elasticity of Supply
> increases
> and ultimately approaches infinity, Elasticity of Demand becomes very
small
> in comparison, and the consumer has to bear the entire burden of taxation.
>
> In other words, cet par, the more elastic supply is, the greater the
burden
> on consumers.
>
> Dave Sowden
> Raffles Junior College
> Singapore
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