ECO 101 Chapter Notes - Chapter 6: Demand Curve
Document Summary
(price) elasticity of demand- is the ratio of the percentage change in quantity demanded to the percentage change in price that brings about the change in quantity demand. When consumers hardly respond to a price change its inelastic. Elasticity calculates the change in quantity demanded as a percentage of the average of two quantities o. The elasticity formula has two basic attributes o o o. Each of the changes with which it deals is a measured as a percentage change. Each of the percentage changes is calculated in terms of the average value of the before and after quantities and prices. Price elasticity of demand and the shapes of demand curves o o o. Vertical line (seemingly simple) straight- line demand curves. Along a straight-line demand curve, the price of elasticity of demand grows steadily smaller as you move from left to right: unit-elastic demand curves. When a given percentage price change e leads to the same percentage.