ECON 1B03 Lecture Notes - Lecture 5: Demand Curve, Final Good, Hyperbola
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16 Oct 2018
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Elastic demand : a change in p leads to a proportionately larger change in qd. Demand is very responsive to a price change. Percentage change in qd > percentage change in p. Perfectly elastic demand : a change in p leads to an infinitely great change in qd. Demand is extremely responsive to a price change. A good with so many substitutes that the price of one changes, people could easily find a cheaper substitute causing the demand for the original to virtually disappear. Unit elastic : a change in p leads to a proportionately equal change in qd. Percentage change in p = percentage change in qd. It has to be non-linear no matter where you are on the curve, tr will always be the same, max value. Now this means that any price and quantity combinate the revenue will be the same (blue and green rectangle)
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