ECON 2005 Lecture Notes - Lecture 10: Price Elasticity Of Demand, Microsoft Powerpoint, Demand Curve
Document Summary
Price elasticity of demand the ratio of= % change in quantity/ % change in price. % change in quantity demanded= change in quantity demanded/ ((q1+q2)/2) times 100% Price elastic demand demand for which quantity drops to zero a the slightest increase in price, infinitely responsive demand. Elastic demand people responsive in change to price, if price falls by 10% then demand rises by 20%, an elastic demand is greater than 1. Unitary elasticity demand elasticity of -1, demand when percentage change in quantity=percentage change in price in absolute value. Inelastic demand quantity response is less than initial price change, not very responsive, -1