16633 Chapter 5: Elasticity of Demand & Supply
Document Summary
Economics for today elasticity of demand & supply chapter 5. Income elasticity: price elasticity of demand, determinants of price elasticity of demand, cross elasticity, price elasticity of supply, price elasticity and the impact of taxation. The concept of elasticity: elasticity explains the sensitivity of one variable to changes in another variable, useful for business decision-making (e. g. pricing, marketing) and policy-making, the elasticity coefficient (ed) is used to measure the degree of elasticity. Price elasticity of demand: the ratio of the percentage change in the quantity demanded of a product to a percentage change in its price, the price elasticity of demand formula is: The midpoint formula: to address this problem, we use the midpoint formula: It does not matter if q1 or p1 is the first number in each term as the midpoint method uses averages. Elasticity coefficients: elasticity coefficients are negative because of the demand curve slope, the elasticity coefficient could be:
