ECON101 Lecture Notes - Lecture 12: Demand Curve
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Price elasticity of demand (ep) income elasticity of demand (ey) cross elasticity of demand (exy) Quantity demanded responds in a change in price demand can also respond to a change in income and a change in other related commodities. The purpose of elasticity of demand is to measure the responsiveness demand to a change in the price of the commodity, income and the price of other related commodities. For instance: if the price of commodity decrease by 10% will quantity demanded increase: by 10%, < 10%, >10% if the income increased by 20% will quantity demanded increase: by 20%, < 20%, >20% if price of tired decrease by 30% will demand for tired increase: by 30%, < 30%, > Measures the responsiveness of quantity demanded to a change in price. Ep = the percentage change in quantity demanded / If ep = 1, referred to unitary price elasticity of demand.