ECON101 Lecture Notes - Lecture 5: Normal Good, Midpoint Method, Demand Curve

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ECON101 Full Course Notes
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ECON101 Full Course Notes
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The basic idea is elasticity measures how much one variable responds in changes to another variable. A common form of elasticity is how much demand for your product will fall if you raise your price. Elasticity is a measure of how changing one variable impacts quantity demanded (qd) or quantity supplied (q. Price elasticity of demand measures how much q d responds to a change in p. It basically measures the price-sensitivity of buyers" demand along a d curve, p and. Q move in opposite directions, which would make price elasticity negative. We will drop the minus sign and report all price elasticities as positive numbers. Standard method of computing the percentage (%) change: The midpoint is the number halfway between the start & end values, the average of those values. It doesn"t matter which value you use as the start and which as the end you get the same answer either way. Extent to which close substitutes are available.

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