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Canada (161,988)
Economics (923)
ECN 104 (387)
Eric Kam (21)
Chapter

Applications of elasticity.

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Department
Economics
Course
ECN 104
Professor
Eric Kam
Semester
Winter

Description
Chapter 5ElasticityIts ApplicationsWhat is elasticityy A measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants The Elasticity of Demand y Price Elasticity of Demand a measure of how much the quantity demanded of a good responds to a change in the price of that good computed s the percentage change in the quantity demanded divided by the percentage in price y Demand for a good is said to be elastic if the quantity demanded responds substantially to changes in the price but inelastic if it responds only slightly to changes in priceyDeterminants of Price Elasticity of Demandgoods with close substitutes tend to have more elastic y Availability of Close Substitutesdemand because it is easier for consumers to switch from that good to others ex butter and margarine are more elastic while eggs are less elasticy Necessities vs Luxuries necessities are less elastic whereas luxuries have elastic demands ex dentist appointment vs buying a sailboat narrowly defined markets tend to have more elastic demand than y Definition of the Marketbroadly defined markets because its easier to find close substitutes for narrowly defined goods ex food is a very broadly defined market therefore has an inelastic demand ice cream is a more narrowly defined market but can still be substituted by other desserts vanilla ice cream is a very narrowly defined market therefore is has a very elastic demand because other flavours could be substitutesy Time Horizon goods tend to
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