ECN 104 Chapter Notes - Chapter 5: Bouncy Ball
Document Summary
Elasticity: a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants. Elasticity of demand: price elasticity of demand: measures how much the quantity demanded responds to changes in the price. Inelastic percentage change in price is greater than the percentage change in quantity demanded. If price rises, quantity demanded falls, revenue will rise. If price falls, quantity demanded rises, revenue will fall. Elastic percentage change in price is lower than percentage change in quantity demanded. If price rises, quantity demanded falls, revenue will fall. If price falls, quantity demanded rises, revenue will rise: unit elastic percentage change in price is equal to percentage change in. total revenue will remain the same; no matter the change in price. Elascity of supply: price elasticity of supply: measures how much the quantity supplied responds to changes in the prices.