ECON 1000 Lecture Notes - Lecture 4: Demand Curve, Inferior Good, Normal Good
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Elasticity looks at if the demand changes when the price changes. Demand curve is always a downward slope. A small increase in the quantity demanded. A large increase in the quantity demanded. The contrast between the two outcomes highlights the need for a measure of the responsiveness of the quantity demanded to a price change. The price elasticity of demand is a units-free measure of the responsiveness of when all other the quantity demanded of a good to a change in its price influences on buying plans remain the same. The price elasticity of demand is calculated by using the formula: To calculate the price elasticity of demand: Calculating the price elasticity of demand for pizza. The price initially is . 50 and the quantity demanded is 9 pizzas an hour. increases to 11 pizzas an hour. by 2 pizzas an hour. demanded is. The price falls to . 50 and the quantity demanded.