COMN 1000 Chapter Notes - Chapter 4: Normal Good, Inferior Good, Demand Curve
6 Dec 2013
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A small increase in the quantity demanded. A measure of the responsiveness of the quantity demanded to a price change. The price elasticity of demand is a units-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. Price elasticity of demand = percentage change in quantity demanded. Change in price is expressed as a percentage of the average price (average of initial price and new price) Change in quantity demanded is expressed as a percentage of the average quantity demanded (average of initial and new quantity) Price falls to . 50 (decrease by ) Percentage change in average price is change in price/average price. Percentage change in average quantity demanded change in quantity demanded/average quantity demanded. Price elasticity of demand = % change quantity demanded / % change price.
