ECN 104 Lecture Notes - Lecture 6: Normal Good, Inferior Good, Agricultural Supply Store
9 Dec 2015
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The price elasticity of demand is the ratio of the percent change in the quantity demanded to the percent change in the price as we move along the demand curve (dropping the minus sign) % change in quantity demanded =change in quantity demanded/initial quantity demandedx100. % change in price = change in price / initial price x 100. Price elasticity of demand = % change in quantity demanded / % change in price. The midpoint method is a technique for calculating the percent change. Calculate changes in a variable compared with the average, or midpoint, of the starting and final values. Two extreme cases of price elasticity of demand. Demand is perfectly inelastic when the quantity demanded does not respond at all to changes in the price. When demand is perfectly inelastic, the demand cure is a. Demand is perfectly elastic, when any price increase will cause the quantity demanded to drop to zero.
