ECON 201 Lecture Notes - Lecture 3: Arc Elasticity, Video Lesson, Demand Curve

• School: Concordia University
• Department: Economics
• Course: ECON 201
• Professor: Ian Irvine

Document Summary

Part 2 responsiveness & the value of markets. Chapter objectives: responsiveness as elasticities, demand elasticities & expenditure, the short run, the long run, & inflation, cross-price & income elasticities, income elasticity of demand, supply side responses. Chapter 4 explores and develops the concept of elasticity, which is the word economists use to define responsiveness. Recall the law of demand states that there exists an inverse relationship btwn p (price) & qd (quantity demanded) Elasticities r there4 all about responsiveness of qd or qs. Percentage change in qd caused by a percentage change in p: % change in quantity demanded. Key component of pricing decision is to know how responsive your market is to variations in your pricing. Start by measuring responsiveness of consumers to price changes. i. e. food not very responsive since necessity: textbooks responsive since there r many alternatives, their purchasing patterns reflect these options.