ECON101 Lecture Notes - Lecture 6: Frozen Yogurt, Economic Equilibrium, Demand Curve

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: Nafeez Fatima

Document Summary

Elasticity measures how responsive variable y is to a change in variable x. Elasticity along a straight line demand curve. 2: cross elasticity of demand, price elasticity of supply. Ed = % change in qd / % change in. Three important things to remember regarding ed. 1: take the absolute value and ignore the negative sign. If % change in price is 10% then there is a 40% change in qd. If price increases by 10% then qd decreases by 40% If price decreases by 10%, then qd increases by 40% Different elasticities of demand: perfectly inelastic demand. Ped = infinity: unit elasticity of demand, elastic demand. Price elasticity of demand for a straight line. Total revenue = price of a product * quantity sold. Occurs when the price balances the plans of buyers and sellers. Equilibrium price: the price at which the quantity demanded equals the quantity supplied. Equilibrium quantity: the quantity bought and sold at equilibrium price.