ECON-1010 Chapter : 6-Elasticity
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12 May 2022
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Inelastic demand does not mean that quantity demanded is totally insensitive to changes in price. Elastic demand: if a change in price causes a relatively large change in quantity demanded. % change = [(ending value - beginning value) / beginning value] x 100. Elasticity of demand = % change in quantity / % change in price. Inelastic demand: if a change in price causes only a small change in quantity demanded. If % change in qd is less than % change in price. The greater the # of substitutes, the greater the elasticity. Whether or not a good is a necessity. If a good is a necessity, it has few or no substitutes, so very little elasticity. If amount spent on a good makes up a large part of one"s income, then that good will be more elastic, compared to a good that one spends little money on.
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