ECN 104 Lecture Notes - Lecture 6: Midpoint Method, Demand Curve, Antivenom
Document Summary
Elasticity- quantifying movement of demand curves: necessities v. s wants. When qd responds strongly to a change in p, demand is relatively elastic (or simply elastic) When qd responds weakly to a change in p, demand is relatively inelastic (or simply inelastic) Price elasticity of demand is determined by: whether close substitutes are available, whether the good is a necessity or a luxury, share of income spent on the good time. Demand is elastic if the price elasticity of demand is greater than 1. Demand is inelastic if the price elasticity of demand is less than 1. Demand is unit-elastic if the price elasticity of demand is exactly 1. The midpoint method is a technique for calculating the percent change. In this approach, we calculate changes in a variable compared with the average, or midpoint, of the starting and final values.