ECO100Y5 Chapter Notes - Chapter 4: Price Elasticity Of Demand, Demand Curve, Price Drop
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ECO100Y5 Full Course Notes
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Demand is elasic when qd is responsive to change in price. Demand is inelasic when qd is unresponsive to change in price. It is usually beter to know percentage change in prices of various products rather than ixed amount. ); measure of responsiveness of qd to change in commodity"s price. This measure is called price elasicity of demand / demand elasicity. Increase in price associated with decrease in quanity. Elasicity is 0 when price leads to no change in qd (verical demand curve: means consumers do not alter consumpion when price changes. Availability of subsitutes and ime period under consideraion. Total expenditure depends on price elasicity of demand. Change in total expenditure depends on relaive changes in price and quanity. % change in price new old/average (new + old/2)/new old/average (new + old/2) If supply curve is verical, qs does not change as price changes; elasicity = 0. If supply curve is horizontal, ininite elasicity of supply.