ECON 2000 Chapter : Chapter 5
Document Summary
The difference between quantity demanded and demand: movement along demand curve, movement of the demand curve. Elasticity is a measure of the responsiveness of one variable to another. The greater the elasticity, the greater the responsiveness. A measure of the responsiveness of quantity demanded to changes in price. Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. Ed = %change in quantity demanded = (q1+q2) This tells us exactly how quantity demanded responds to a change in price. Price elasticity of demand is always expressed as a positive number. Because it is generally understood that demand elasticity"s are negative (demand curves have a negative slope), they are often reported and discussed without the negative sign. When demand falls, the number is negative, when something rises number is positive. Quantity demanded does not respond strongly to price changes, price elasticity of demand is less than one.
