ECN 104 Lecture Notes - Lecture 8: Demand Curve
Document Summary
Price elasticity of demand ratio of the percent change in the quantity demanded to the percent change in the price as we move along the demand curve (dropping the minus sign). Responsiveness: large elasticity = less ppl buy, when one changes, how does it effect the other. % change in price change in quantity demand initial quantity demanded x 100. % change in = quantity demand x 100. %change in price = %change price initial price change in quantity demanded. __________initial quantity demanded________ change in price initial price. Why does it matter whether demand is unit-elastic, inelastic, or. Elastic: predicts how changes in the price of a good will affect the total revenue earned by producers from the sale of that good. Infinity: demand curve, supply curve, steep = low l. Each unit sell at a hirer price. Price elasticity of demand is determined by: whether close substitutes are available, whether the good is a necessity or a luxury.