ECON 1000 Lecture Notes - Lecture 4: Midpoint Method, Hectare, Time Horizon
Document Summary
Econ week 5: the elasticity of demand: Price elasticity of demand: a measure of how much the quantity demanded of a good responds to a change in the price of that good. Elastic (e > 1): if the quantity demanded responds substitutes to changes in the price. Inelastic (e < 1): if the quantity demanded responds only slightly to change in the price. Availability of close substitutes (elasticity): goods with close substitutes tend to have more elastic demand because it is easier for consumers to switch from that good to others. Necessities (inelasticity) vs. luxuries (elasticity): necessities tend to have inelastic demands, whereas luxuries have elastic demand. Definition of the market: narrowly defined markets tend to have more elastic demand than broadly defined markets because it is easier to find close substitutes for narrowly defined goods. Time horizon: goods tend to have more elastic demand over longer time horizons.
