ECON-2110 Lecture 12: Oct 19 Notes - Elasticity part 2
Document Summary
Topic 4: measuring responsiveness to price elasticity part 2. Objectives: to understand elasticity what it means, how its measured, how to use it: elasticity and time. Set of substitutes increase as time goes by. Demand and supply are always more elastic in the long run than short term. ** the longer the period, the greater # of actions a consumer or producer can take (aka some actions become less costly as time passes) If demand is perfectly inelastic, ed = 0. Qd does not change even if price changes (completely vertical d: perfectly inelastic demand curve) Demand is never perfectly inelastic, and is always more elastic: perfectly elastic demand in the long run. If demand is perfectly elastic, ed = infinity. Smallest rise in price would reduce qd to zero. Identical perfect substitutes: perfectly elastic supply, perfectly inelastic supply. Implies that qs can be expanded w/o raising per unit costs.
