ECON-1010 Chapter 5: CH. 5_ Using Supply and Demand
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ECON-1010 Full Course Notes
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If you rise the price you will sell fewer, but make more per page. If you lower the price you will sell more, but make less per page. Which one will give you the most revenue. Elastic demand: the quantity demanded is sensitive to changes in prices. Specifically, demand is elastic if the percentage change in quantity demanded divided by the percentage change in price is greater than one. Elasticity of demand = (% change in quantity)/(% change in price) Inelastic demand: the quantity demanded is not as sensitive to changes in prices. Specifically, demand is inelastic if the percentage change in quantity demanded divided by the percentage change in price is less than one. Number of substitutes with more substitutes, likely to be more elastic and easier to switch between them. How necessary the good is less sensitive to changes in price of things we need like medicine, nature of the tastes.