ECON 208 Chapter Notes - Chapter 4: Demand Curve, Economic Equilibrium, Longrun
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ECON 208 Full Course Notes
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If two demand curves cross, flatter one is more elastic than stepper one. Elasticity and total expenditure: total expenditure= price x quantity, when price falls, quantity demanded increases. If demand is elastic, the quantity change dominates, and total revenue rises. If demand is inelastic, the price change dominates and total revenue falls. If price is unit elastic, the percentage change in quantity demanded equals the percentage change in price and total revenue remains unchanged: price elasticity of supply measures the responsiveness of the quantity supplied to. 4. 2 price elasticity of supply a change in the product"s own price: any elasticity of a supply curve originating from 0 is 0, and unit elastic regardless of the slope! As it is the ray: the elasticity of supply depends on how easily firms can increase output in. Determinants of supply elasticity response to an increase in the product"s price: ease of substitution, short run and long run.