ECON 202 Lecture Notes - Lecture 10: Demand Curve
23 Feb 2017
School
Department
Course
Professor
Document Summary
Yes if people did not respond, demand would be perfectly inelastic. Gasoline demand is inelastic: quantity demanded does not change much as the price of gasoline changes. It is not perfectly inelastic: it is somewhat responsive to price. How one economic variable responds to changes in another economic variable. Elasticity measures one response to the change in a variable. Why do some goods have a high price elasticity of demand, while others have a low price elasticity of demand, while others have a low price elasticity of demand. There are several characteristics of the good, of the market, etc. that determine this. People will move away from consumptopn of a good if its price increases if they have a lot of options. If a product has more substitutes available, it will have more elastic demand. Example: not many substitutes for gas, so its price elasticity of demand is low.
