Economics 1021A/B Lecture Notes - Test Method
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ECON 1021A/B Full Course Notes
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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. If the quantity demanded doesn"t change when the price changes, the price elasticity of demand is zero and the good has a perfectly inelastic demand. If the percentage change in the quantity demanded is smaller than the percentage change in price, the price elasticity of demand is less than 1 and the good has inelastic demand. If the percentage change in the quantity demanded is greater than the percentage change in price the price elasticity of demand is greater than 1 and the good has elastic demand. If the price elasticity of demand is infinity, the good has perfectly elastic demand. If the percentage change in the quantity demanded equals the percentage change in price, the price elasticity of demand equals.