How do we react to changes in price?
(The changes in price do no always increase or decrease the same quantity of
demand...)-> this show the price elasticity~
It is important for business individuals to know which supply&demand curve
they are facing with. They need to know what the elasticity is.
When the demand curve’s slope is steep, then an increase in supply brings a large
fall in price and a small increase in the quantity demanded.
When the demand curve’s slope is flat, then an increase in supply brings a small
fall in price and a large increase in the quantity demanded.
!!!!!!When you are comparing 2 different goods, then we cannot compare the
PRICE ELASTICITY OF DEMAND
the slope of the price elasticity of demand is always(most of the time) negative.
The slope of the price elasticity of supply is always(most of the time) positive.
But remember that we use absolute value.
~~ income&quantity demanded for food When income increases, the QD for fo