ECON 1B03 Lecture Notes - Lecture 5: Inferior Good, Normal Good, Arc Elasticity
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ECON 1B03 Full Course Notes
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Elasticity: that restaurant has been really slow lately. Why did they raise their prices: tim"s has just raised the price of cofee again. I"m mad but i"m still going to buy one every morning. Elasticity: measure how responsive qd or qs is to changes in p and other determined. Price elasticity of demand: price elasticity of demand is a measure of how much the quantity demanded of a good responds to a change in the price of that good. Ep = percentage change in qd percentage change in p. Types of price elasticity of demand: people respond to changes in price diferently depending on various factors. Inelastic demand: a change in p leads to a proportionately smaller change in. Demand is not very responisve to a change in p. % in qd smaller than % change in p. Perfectly inelastic demand: a change in p does not change qd what so ever.