ACTG 2010 Chapter 4: ch 4
12 Jul 2016
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Elasticity of demand price elasticity of demand: unit-free measure of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same o. Elastic demand: percentage change in quantity demanded is greater than the percentage change in price. elasticity > 1. Inelastic demand: percentage change in quantity demanded is less than the percentage change in price. elasticity = between 0 and 1. Perfectly inelastic demand: quantity demanded remains constant when price changes. elasticity = 0 (vertical line) Unit elastic demand: percentage change in quantity demanded equals the percentage change in price. elasticity = 1. Perfectly elastic demand: quantity demanded changes by an infinitely large percentage in response to a tiny price change. elasticity= (horizontal line) Elasticity of supply elasticity of supply: measures the responsiveness of the quantity supplied to a change in the price of a good o.
