ECON 001 Lecture Notes - Lecture 4: Invisible Hand, Marginal Cost, Price Ceiling
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Allows us to compare goods and countries o. Always going to be negative because as the percentage change in price. But you take the increases, quantity demand decreases (and vice versa) (cid:0) Price elasticity can range from zero to infinity o. Elastic demand = price elasticity of demand > 1. Inelastic demand = price elasticity of demand < 1. Unit elastic demand = price elasticity of demand = 1 o o. Perfectly inelastic demand curve regardless of price, demand remains constant o. Ex: if addicted to a good like cigarettes, heroin, or insulin etc. Straight line demand curve (top = elastic and bottom = inelastic) demand curve does not have the same elasticity all along it. Total revenue = the total amount of funds received by a seller of a good or service, calculated by multiplying price per unit by the number of goods sol: tr = p x q.