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Ann Harper Fender

In: 21st Century Economics: A Reference Handbook

Chapter 9: Demand Elasticities

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Demand Elasticities
Demand elasticities

Economic lore depicts Alfred Marshall leaping in 1881 from the low roof of the Oliva Hotel while on vacation in Palermo, Italy; Marshall, the legend continues, ran through the town's streets shouting, “Eureka, I've found it!” The legend has his excitement stemming from his discovery of a simple formalization for the concept of elasticity (Keynes, 1963).1 Marshall was not the first to incorporate something like elasticity in his economic analysis. He was familiar with the work of mathematical economists Augustin Cournot and Johann von Thünen, both of whom developed theories of firm behavior earlier in the nineteenth century and arguably hinted at elasticity. The classical economist John Stuart Mill also discussed the impact of changes in price on quantity consumed and on ...

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