ECON 110 Lecture Notes - Lecture 3: Demand Curve
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ECON 110 Full Course Notes
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Econ 111 lecture 3 and 4 reading (ch 4,5) Demand is elastic when quantity demanded is quite responsive to changes in price. The reduction in supply pushes up the price but because the quantity demanded is quite responsive, only a small change in price is necessary to restore equilibrium. Demand is inelastic when quantity demanded is relatively unresponsive to price. Decrease in supply at the original price causes a shortage that increases the price. The quantity demanded does not fall much in response to the price. The equilibrium raises more, and equilibrium of quantity falls less. Elastic the demand curve does not move (flatter slope) quantity falls a lot, price goes up a bit. Inelastic the demand curves tilts (steep slope) quantity falls a bit, price goes up a lot.