Economics 1021A/B Chapter Notes - Chapter 4: Inferior Good, Demand Curve, Normal Good
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ECON 1021A/B Full Course Notes
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If the quantity demanded is not very responsive to a change in price, the. If the quantity demanded is very responsive to a change in price, the price barely rises, and the equilibrium quantity changes a lot price rises a lot and the equilibrium quantity doesn"t change much. If the demand curve is steep the quantity demanded of the good isn"t very: looking at slope doesn"t always work because measurement units differ responsive to a change in price. If price cut increases total revenue, demand is elastic. If price cut decreases total revenue, demand is inelastic. If price cut does not change total revenue, demand is unit elastic. If demand for a good is income elastic, the percentage of income spent on that good increases as income increases: positive and less than one (normal good, income inelastic) If demand for a good is income inelastic, the percentage of income spent on that good decreases as income increases: negative (inferior good)