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ECON101 Lecture 9: ECON101-LECTURE #9-ELASTICITY

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ultramarineeel54
25 Sep 2018
School
University of Alberta
Department
Economics
Course
ECON101
Professor
Alexander Gainer

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Document Summary

It is the measure of an individual"s responsiveness to a change in one variable. Economists measure the impact of a change in one variable on a change in quantity demanded (qd) or quantity supplied (qs). Types of elasticities: price elasticity of demand, cross elasticity of demand, income elasticity of demand, price elasticity of supply. P. e. d = % (cid:3030) (cid:3041)(cid:3034)(cid:3032) (cid:3041) (cid:3048)(cid:3041)(cid:3047)(cid:3047) (cid:3031)(cid:3032)(cid:3040)(cid:3041)(cid:3031)(cid:3032)(cid:3031) (cid:3042)(cid:3033) (cid:3034)(cid:3042)(cid:3042)(cid:3031) Types of p. e. d and the range of their values. Change in price leads to a more than proportionate change in quantity demanded. Change in price leads to an equally proportionate change in quantity demanded. Change in price leads to a less than proportionate change in quantity demanded. P. e. d = 0 (perfectly inelastic) or p. e. d = (perfectly elastic) are theoretical cases. But in exams and calculations, we simply ignore the negative sign. The midpoint is the average of the start and end value. So, for this example = (cid:4666)(cid:2869)(cid:2868) + 5(cid:4667) (cid:2870) =7. 5.

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Related Questions

If the percentage change in the quantity demanded of a good is less than the percentage change in price, the price elasticity of demand is:

A) Elastic

B) Inelastic

C) Perfectly inelastic

D) Unitary elastic

1. In each case below, what is the value of the price elasticity of demand? Is demand perfectly inelastic, inelastic, unit elastic, elastic or perfectly elastic?

a. Price falls by 10%, quantity demanded rises by 8%

b. Price rises by 3%, quantity demanded falls by 3%

c. Price rises by 1%, quantity demanded falls by 5%

d. Price rises by 5%, quantity demanded collapses to zero

e. Price falls by 2%, quantity demanded does not change

interval (or arc) elasticity

cross-price elasticity

price elasticity of demand

elastic demand

income elasticity

inelastic demand

inframarginal units

marginal revenue

point elasticity

price effect

quantity effect

total revenue

unitary elastic demand

1. __________________ A measure of consumersҀ™ sensitivity or responsiveness to changes in the price of a good or service.

2. ___________________ When the percentage change in price (in absolute value) is more than the percentage change in quantity demanded (in absolute value).

3. ___________________ When the percentage change in quantity demanded (in absolute value) is more than the percentage change in price (in absolute value).

4. ___________________ When the percentage change in quantity demanded (in absolute value) is just equal to the percentage change in price (in absolute value).

5. ___________________ Total amount paid to a producer for a good or service P * Q.

6. ___________________ The effect on total revenue of a change in price, holding quantity constant.

7. ___________________ The effect on total revenue of a change in quantity, holding price constant.

8. ___________________ An elasticity calculated over an interval of a demand curve or demand schedule.

9. ___________________ Elasticity at a specific price or point on a demand curve.

10. ___________________ A measure of how responsive quantity demanded is to a change in income, all other things constant.

11. ___________________ A measure showing how responsive the quantity demanded of one good is to changes in the price of another good, other factors constant.

12. ___________________ The additional revenue received by producing and selling one more unit of output.

13. ___________________ Units of output that could have been sold at a higher price had the firm not lowered its price to sell additional (marginal) units.