MCS 1000 Chapter Notes - Chapter 4: Demand Curve, Negative Number, Longrun

• School: University of Guelph
• Department: Marketing and Consumer Studies
• Course: MCS 1000
• Professor: Sergio Meza

Document Summary

The price of elasticity of demand is a units-free measurement of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same. Let"s say you ha(cid:448)e a (cid:272)hart a(cid:374)d you (cid:449)a(cid:374)t to (cid:272)al(cid:272)ulate this shit: It is (quantity difference / quantity average) / (price difference / price average) Si(cid:374)(cid:272)e it is a per(cid:272)e(cid:374)tage, you ha(cid:448)e to (cid:373)ultiply (cid:271)oth top a(cid:374)d (cid:271)otto(cid:373) (cid:271)y a (cid:1005)(cid:1004)(cid:1004) (cid:271)ut the (cid:1005)(cid:1004)(cid:1004)"s (cid:449)ould just (cid:272)a(cid:374)(cid:272)el out so it"s poi(cid:374)tless. Elasticity is a units-free measure because the percentage change in each variable is independent of the units in which the variable is measured. The ratio of the two percentages is a number without units. When the price of a good rises, the quantity demanded decreases. Because a positive change in price brings a negative change in the quantity demanded, the price elasticity of demand is a negative number.