ECN 104 Chapter 4: Chapter 4
Document Summary
Chapter 4: elasticity, consumer surplus and producer surplus. Elasticity allows analysis of supply and demand with greater precision: measure of how many buyers & sellers respond to change in market. Elasticity: a measure of the responsiveness of qd/qs to one of its determinants. & quantities a the reference points for competing % I nterpretation of p rice elasticity of demand. **take absolute value: quantity demanded responds strongly to changes in price. Product/resource demand with a price elasticity coefficient that is greater than one, ed>1. Inelastic demand: www. notesolution. com: quantity demanded doesn"t respond strongly to price changes. Product/resource demand with a price elasticity coefficient that is less than one, ed<1: unit elasticity demand, quantity demanded changes by the same percentage as the price price elasticity coefficient is equal to one, ed = 1. Perfectly inelastic: quantity demanded doesn"t respond to price changes. Perfectly elastic: quantity demanded changes infinitely with any change in price www. notesolution. com.