ECON 1011 Lecture Notes - Lecture 9: Economic Surplus, Demand Curve
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Lecture 9 - demand elasticities, and consumer surplus. Price elasticity of demand and ped at point on demand curve. Note that absolute value keeps the value positive. Example: if coffee demand rises by 10% when the price of coffee falls 5%. 5 = % change in qd / 10% , %qd = -5% Elasticity corresponds to the slope of the demand curve. Infinitely elastic gives us a perfectly flat (slope of 0) demand curve. Perfectly inelastic is a vertical demand curve. Demand is insensitive to changes in price. Unit elastic (elasticity = 1) will be found at the midpoint. When we are to the right of this point: inelastic. When we are to the left of this point: elastic. The multiplication corresponds to the area of the rectangles under the demand curve. This is how you can tell trc is bigger.
