Chapter 4 Elasticity

# Chapter 4 Elasticity - Chapter 4 Elasticity Price...

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Chapter 4 - Elasticity Price Elasticity of Demand:      percentage change in quantity demanded that results from  a 1 percent change in price Elastic:      demand is elastic with respect to price if price elasticity of demand is greater  than 1. Inelastic:      demand is inelastic with respect to price if price elasticity of demand equals  1. Unit Elastic:      demand is unit elastic with respect to price if price elasticity of demand  equals 1. Price Elasticity Defined Percentage change in quantity demanded = 6 percent = -3. Percentage change in price     -2 percent Determinants of Price Elasticity of Demand Substitution Possibilities Budget Share Time Formula for Price Elasticity Price elasticity =   =  Q/Q   P/P Formula for Price Elasticity at Point A      A  = P  x     1   .  Q    slope

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Chapter 4 Elasticity - Chapter 4 Elasticity Price...

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