Chapter Summary

Chapter 3 adds the dimension of quantitative supply and demand analysis to that of the qualitative analysis covered in Chapter 2. The chapter covers elasticity, functional forms for demand and supply, and concludes with a brief overview of regression analysis. Throughout Chapter 3 problems are used to help the students practice using the concepts of own-price elasticity, income elasticity, and cross-price elasticity. The student is also exposed to demand and supply functions that are non-linear, which should help them work with other commonly used functional forms of supply and demand.