Economics 1021A/B Lecture Notes - Lecture 4: Inferior Good, Normal Good, Negative Number
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ECON 1021A/B Full Course Notes
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Elasticity: measure of responsiveness that is independent of units of measurement. Price elasticity of demand: a units-free measure of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same. It depends on the responsiveness of quantity demanded to a change in its price: responsiveness= sensitivity. A percentage change is a proportionate change multiplied by 100: a units-free measure, percentage change in each variable is independent of the units in which the variable is measure. If the quantity demanded remains constant when the price changes, then the price elasticity of demand is zero and the good is said to have a perfectly inelastic demand. % change in quantity is less than percentage change in price. % change in quantity is equal to % change in price. % change in quantity is greater than % change in price.