ECON 208 Lecture 5: Chapter 4
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ECON 208 Full Course Notes
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Reduction o price increases quantity demanded and reduces quantity supplied. Demand is said to be elastic when quantity demanded is very responsive to a change in the product"s own price. Demand is inelastic if quantity demanded is very unresponsive to changes in its price. Elasticity is related to the slope of the demand curve, but it is not exactly the same curves) if: We can only do the visual comparison (comparing the slope of the demand. Both figures are drawn on the same scale. We start from the same price- quantity equilibrium. Otherwise, we need to know the percentage change in the prices and quantities of the various products. Elasticity (greek letter eta: n) is defined as: n: percentage change in quantity demanded. Percentage change in price n= delta q/q or delta q x q. Demand elasticity is negative, but economists usually stress the absolute value.