ECN 104 Lecture Notes - Lecture 3: Joule, Antivenom, Normal Good

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What is the meaning and importance of: price elasticity of demand, income elasticity of demand, price elasticity of supply. What factors influence the size of these various elasticity"s. How the cross-price elasticity of demand measures the responsiveness of demand for one good to changes in the price of another good. Elasticity measures how responsive one variable is to changes in another variable. Price elasticity of demand measures how responsive quantity is to changes in demand, along a demand curve. The price elasticity of demand is the 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) At a price of per vaccination, the quantity of vaccinations demanded is 10 million per year (point a). When price rises to per vaccination, the quantity demanded falls to 9. 9 million vaccinations per year (point b).

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