BIOCH498 Lecture Notes - Lecture 12: Demand Curve
13 Jun 2015
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Document Summary
Measure of responsiveness i. e. measuring responsiveness of quantity demanded to price changes. Consumers demand/buy much less even when the price rises a little. Elasticity of demand ( n d - defined as the ratio of the percentage change in quantity demanded to the associated change in price. Solves unit problem because percentage is unaffected by units of measurement (curve will look the same) Measures demand before and after price change. Each percentage change is taken as an absolute value , no minus signs are included. Average of before and after for prices and demand are taken to determine the price elasticity: Nd is the % change in quantity demanded / % change in price. Perfectly elastic demand curves (aka infinitely elastic) = straight horizontal line. Occurs when many producers sell a product and consumers can switch easily from one seller to another if particular producer raises his price.
