ECON 1110 Chapter Notes - Chapter 4: Tax Incidence, Inferior Good, Normal Good
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Price elasticity of demand- elastic when responsive to change in price. *demand fnc are curves not schedules and slope varies when moving down, elasticity at demand varies as you move down a straight line curve. Where demand is inelastic, tr increases and $ rises despite the doubling the price fewer substitutes for this good where demand is elastic, doubling yields a. Results in large loss of market share. *rmb that q. s and price change in the same direction so we don"t use absolute value signs. If the denominate is positive but the numerator is negative. When income rises, less of the good will be demanded. Consumers will be able to afford goods they perceive to be of better quality. Of course, the overall result could be positive, less than one or more than one. Nxy= change in q. d of x/ change in price of y.
