Economics 1021A/B Chapter Notes - Chapter 4: Demand Curve, Negative Number, Inferior Good
mariameelguendou and 38538 others unlocked
94
ECON 1021A/B Full Course Notes
Verified Note
94 documents
Document Summary
Price elasticity of demand: price elasticity of demand a units-free measure of the responsiveness of the quantity demanded of a good to a change in its price when all other in uences on buying plans remain the same. Percentage change in quantity demanded = change in price / average price. Percentage change in quantity supplied = change in supply / average supply. Percentages and proportions: elasticity is the ratio of two percentage changes therefore when we divide, the 100s cancel, a percentage change is a proportionate change multiplied by 100. A units-free measure: elasticity is a units-free measure because the percentage change in each variable is independent of the units in which the variable is measured, the ratio of the two percentages is a number without units. The elasticity of demand for gods depends on: the closeness of substitutes, the proportion of income spent on the good, the time elapsed since the price change.