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ECON 1010 (102)
Lecture 27

ECON 1010 Lecture 27: Lecture 27

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ECON 1010
Laura K.Brown

OS98 1. Overall impact on income 2. Ex: buying paper clips for a year – small dent in your income Computing the Price Elasticity of Demand: 1. The percentage change in the quantity demanded divided by the percentage change in the price 2. Price elasticity of demand = % change in quantity demanded / % change in price 3. Because the quantity demanded of a good is negatively related to its price, the percentage change in quantity will always have the opposite sign as the percentage change in price 4. Price elasticities of demand are sometimes reported as negative numbers 5. Common practice is to drop the negative sign and reporting all price elasticities as positive numbers (absolute value) 6. A larger price elasticity implies a greater responsiveness of quantity demanded to price The Midpoint Method: A Better Way to Calculate Percentage Changes and Elasticities: 1. Calculating the price elasticity of demand between two points 2. Problem: the elasticity from point A to point B seems different from poin
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