ECON 200 Chapter Notes - Chapter 4: Midpoint Method, Demand Curve, Negative Number

• School: University of Maryland
• Department: Economics
• Course: ECON 200
• Professor: Cindy Clements

Document Summary

Elasticity- a measure of how much consumers and producers will respond to a change in market conditions. Measure of consumer sensitivity to price changes. Price elasticity of demand- the size of the change in the quantity demanded of a good or service when its price changes. Price elasticity of demand = % change in q demanded. Percentage change in quantity = [(q2-q1)/q1] x 100. Percent change- the difference between the starting and ending levels divided by the starting level, expressed as a percentage. Mid-point method- method that measures percentage change in demand (or supply) relative to a point midway between two points on a curve; used to estimate elasticity. When the price of a good with a close substitute increases, consumers will buy the substitute instead. If close substitutes are available for a particular good, then the demand for that good will be more elastic than if only distant substitutes are available.