Economics 1021A/B Lecture Notes - Normal Good, Inferior Good

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ECON 1021A/B Full Course Notes
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ECON 1021A/B Full Course Notes
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The price elasticity of demand is a units-free measure of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same. It is calculated by: (change in quantity demanded/ average quantity demanded) (change in price/ average price) The smallest possible increase in price causes an infinitely large decrease in the quantity demanded (ex. two pop machines beside each other) The percentage decrease in the quantity demanded exceeds the percentage increase in price (ex. automobiles and furnituredemand decreases with rise in price, demand increases with fall in price) The percentage decrease in the quantity demanded is less than the percentage increase in price (change in one causes equal change in another) The percentage decrease in the quantity demanded is less than the percentage increase in price (ex. food and shelterdemand does not increase or decrease with a fall or rise in price)

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