EC120 Chapter Notes - Chapter 5: Midpoint Method, Hector, Normal Good
carminegrasshopper545 and 38337 others unlocked
30
EC120 Full Course Notes
Verified Note
30 documents
Document Summary
A measure of the responsiveness of quantity demanded or quantity supplied to one of it. A measure of how much the qd of a good responds to a in the p of that good. If the qd responds substantially to a in p. If the qd responds only slightly to a in p. Availability of close substitutes: more elastic for goods w/ more substitutes, consumers can easily switchover to a similar good (e. g. ) pop coke v pepsi, more elastic for goods w/ less substitutes (e. g. ) eggs. Depends on the perspective of the buyer: necessities tend to have an inelastic demand need (e. g. ) medicine, gasoline, water, luxuries tend to have an elastic demand want (e. g. ) sailboats, watch, jewellery. Time horizon: more elastic over longer time horizons, more inelastic over shorter period of time. Total revenue and the price elasticity of demand. Total revenue (in a market) the amount pd by buyers and received by sellers of a good.