ECON101 Chapter Notes - Chapter 4: Inferior Good, Normal Good
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ECON101 Full Course Notes
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Price of elasticity demand (cid:3253) measures responsiveness of quantity demanded to change price of that good. (cid:3253) unit-free measurement. Ped = |% quantity demanded| = | q/qave| % price p/pave (cid:3253) elasticity is not equal to slope, pave falls and qave increases. Total revenue = p * q; total revenue test: Econ 101: week 3 - chapter 4 (elasticity) (cid:3254) short-run demand is usually less elastic than long-run demand. Cross elasticity of demand: measures the responsiveness of quantity demanded of good a to a price of good b. (cid:3253) cedx = % quantity demanded good a. % price good b (cid:3253) positive means substitute (cid:3253) negative mean complement (cid:3253) 0 means independent. Income elasticity of demand: measures responsiveness of demand to a change in income. (cid:3253) iedx = % quantity demanded. Elasticity of supply (cid:3253) measures responsiveness of quantity supplies to change in price (cid:3253) % quantity supplied. Econ 101: week 3 - chapter 4 (elasticity)