PHYSICS Lecture Notes - Lecture 1: Hyperbola, Demand Curve, Habituation
Document Summary
The elasticity of demand measures the responsiveness of the quantity demanded for a good to a change in its price, price of other goods and changes in the consumer"s income. Alfred marshall was the first economist to develop the concept of price elasticity of demand as the ratio of a relative change in quantity demanded to a relative change in price. Perfectly inelastic demand: the demand curve will be parallel to the y-axis. If the price increases or decreases, the quantity demanded remains fixed, i. e. ed = 0. Inelastic demand: the slope of an inelastic demand curve is steep when a large change in the price does not bring about a significant change in the demand, i. e. ed < 1. Unit elastic demand: the demand curve will be a rectangular hyperbola as it extends to both axes. Percentage change in the demand is equal to percentage change in the price, i. e. ed = 1.
