# Lecture 5 - Outline for Lecture 5 Price Elasticity of...

• Notes
• 6

This preview shows pages 1–3. Sign up to view the full content.

Outline for Lecture 5 Price Elasticity of Demand How do we define price elasticity of demand? -Price elasticity can be defined as a consumer’s sensitivity to a price change. The Price Elasticity Coefficient and Formula How do we measure price elasticity of demand? What is in the numerator of elasticity equation? What is in the denominator? -percentage change in the equation calculated by dividing the change in quantity demanded by the original quantity demanded and dividing the change in price by the original price. -percentage change in quantity demanded of product X; change in quantity demanded of X; change in price of X -percentage change in price of product X; original quantity demanded of X; original price of X In elasticity calculations, we use the midpoint formula to determine percentage changes. According to midpoint formula, how do we measure percentage change in quantity demanded? How do we measure percentage change in price? -change in quantity divided by the sum of quantities divided by two. -change in quantity number and divide it by the change in price divided by the sum of prices divided by two Interpretations of E d

This preview has intentionally blurred sections. Sign up to view the full version.

If price elasticity of demand for a commodity is ___ greater than __ 1, demand is elastic. What does elastic demand indicate in terms of how responsive consumers are to price changes?
This is the end of the preview. Sign up to access the rest of the document.
• Summer '16
• Omar

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern