ECO100Y5 Chapter Notes - Chapter 4: Demand Curve

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ECO100Y5 Full Course Notes
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Elasticity- measures the responsiveness of one variable to a change in another variable. Slope (depends on units) is not equal to elasticity (unit free since it"s measured in percentage changes) Measure of the responsiveness of quantity demanded to a change in the commodity"s own price. Elastic- buyers decision to purchase goods changed after price change (airline price) Inelastic- buyers decision to purchase goods does not cause a significant change after price change (salt) Both curves are drawn on the same scale. The slope of a demand curve tells us the amount by which price must change to cause a unit change in quantity demanded. Steeper demand curve has larger absolute slope. Initial equilibrium prices and quantities are the same. Larger absolute change is also the larger percentage change. It is more revealing to know the percentage change in the prices of various products.

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