Sunday, February 4, 2018

Price elasticity of demand

Elasticity of demand-A measure of how consumers will react to a change in price 

Inelastic demand [needs]- the demand for a good will not change, or will change very little regardless of price (few or no substitutes) ex: water, gas 
If required to calculate (E < 1) 

Elastic demand [wants]- demand will change greatly given a small change in price Ex: soda, dress, luxury food  
If required to calculate (E > 1) 
Unitary demand- (E=1)  

Total revenue= price times quantity [always must have dollar sign]  


calculating the price elasticity of demand 

Quantity 
- new minus old quantity divided by old quantity 

Price
- new minus old price divided by old price 

               Δ%  in price

Δ% in Quantity demanded
  Δ% in Price
at

2 comments:

  1. Mark-Leo B.February 5, 2018 at 4:13 PM

    Amazing notes. I missed some notes for calculating for the price elasticity of demand and the price of it, but I got it down to calculate the price elasticity of demand.

    ReplyDelete
  2. UnknownFebruary 6, 2018 at 4:26 PM

    Your notes are good, although you should add a visual aide to better interpret the notes. Overall, everything else is good.

    ReplyDelete

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