ECON 110 Lecture 4: Chapter 4- Elasticity
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ECON 110 Full Course Notes
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Basic idea: elasticity measures how much one variable responds to changes in another variable. Example: how demand for da lousy university falls if you raise tuition. Elasticity: a numerical measure of the responsiveness of qd or qs to one of determinants (eg, price, income) Demand is said to be elastic when quantity demanded is very responsive to a change in the products own price. Demand is inelastic if quantity demanded is very unresponsive to changes in its price. Elasticity is related to the slope of the demand curve, but it is not exactly the same. Price elasticity of demand (cid:4666)(cid:4667: = (cid:3017) (cid:3018) (cid:3017) (cid:3017) value. Demand elasticity is negative, but economists usually emphasize theabsolute. Measures the price sensitivity of buyers" demand: measures how much qd responds to a change in price (p). Elasticity usually measures the change in p and q relative to some base values of p and q.