ECON101 Chapter Notes - Chapter 4: Normal Good, Inferior Good, Demand Curve
purplechimpanzee495 and 51 others unlocked
79
ECON101 Full Course Notes
Verified Note
79 documents
Document Summary
Chapter overview: to predict the quantitative effects of changes in demand and supply on prices and quantities, we need to know how responsive demand and supply are to price and other influences on buying plans and selling plans, this chapter explains how we measure the responsive demand and supply to price and other influences on buying plans and selling plans using the concept of elasticity. Figure 4. 1: slope of the demand curve is very steep. 2: slope of the demand curve is flat. The contrast between the two outcomes in figure 4. 1 highlights the need for. A measure of the responsiveness of the quantity demanded to a price change. 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 buyers" plans remain the same. The price elasticity of demand is calculated by using the formula: