ECON 20A Lecture Notes - Lecture 3: Apple Juice, Demand Curve, Normal Good
Document Summary
Elasticity - is a measure of responsiveness (change in) of quantity demanded or supplied to a change in one of its determinants. Mostly the determinant we"re going to study is price. Law told us the direction of change, elasticity will measure the magnitude of change. A measure of how much quantity demanded changes to a change in price. Price el of demand = - percentage change in qty demanded / percentage change in price. Negative because of the downward slope of the demand curve. If demand responds substantially to a change in price, then: If demand responds only slightly to a change in price, then: Determinants of price elasticity of demand: availability of close substitutes. Otbe, the availability of more substitutes will imply demand is more elastic i. can replace the original good with a substitute so demand would change substantially: definition of a market.