EC120 Chapter Notes - Chapter 5: Hectare, Economic Equilibrium, Midpoint Method
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EC120 Full Course Notes
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Ec120: chapter 5 elasticity and its application. Elasticity: measure of responsiveness of quantity demanded or quantity supplied to one of its determinants. The price elasticity of demand and its determinants. Law of demand states that fall n price of good raises quantity demanded. Price elasticity of demand: measure of how much quantity demanded of a good responds to a change in price of that good, computed as a percentage change in quantity demanded divided by the percentage change in price. Elastic: demand is elastic if quantity demanded responds substantially to changes in price. Inelastic: demand is inelastic if quantity demanded responds only slightly to changes in the price. Price elasticity of demand for any good measures how willing consumers are to move away from good as price rises. Elasticity reflects many economic, social, and psychological forces that shape consumer tastes. General rules about what determines price elasticity of demand: