ECON101 Lecture Notes - Lecture 4: Demand Curve
purplechimpanzee495 and 51 others unlocked
79
ECON101 Full Course Notes
Verified Note
79 documents
Document Summary
If there is a change in x, how much does y change as a result of that. Elasticity measures how responsive is variable y to a change in variable x. Ed = %change in qd / %change in p. Three important things to remember regarding ed: it is a unit free measure, take the absolute value and ignore the negative sign, it is a ratio of two proportions. Demand can be inelastic, unit elastic, or elastic, and can range from zero to infinity. Rectangular parabola y = a/x xy = a where a = constant. Price elasticity of demand for a straight line. Total revenue = price of a product * quantity sold. Demand is elastic ( |ed| > 1) (%change in qd / %change) > 1. Proportion of income spent on the good. The time elapsed since a price change. Es = %change in qd for good x / %change in p for good y.