ECON 101 Lecture Notes - Lecture 30: The Rubber Band, Rubber Band, Demand Curve
Document Summary
An economic term used to measure the sensitivity of one variable (e. g. the quantity demanded) to the change of another variable (e. g. price) The percentage change in quantity demanded divided by the percentage change in price. Produces a number less than 1, equal to 1 or larger than 1. Ed will be a negative number since demand is a downward sloping relationship. For convenience we drop the negative sign and use the absolute value when talking about elasticity of demand. Ed = % change in quantity demanded / % change in price. Measures the percentage change in quantity demanded in response to a one percent change in price. Varies depending on the price at a point on the demand curve. Varies depending on the quantity at a point of the demand curve. Varies depending on the slope at a point on the demand curve. A piece of concrete is not able to be stretched.
