Chapter 5

Chapter 5 - Determinants of elasticity:- Availability of...

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Chapter 5 Terms: Elasticity – a measure o f the strength of relationship between two things (either steep or flat slope) Elastic – quantity demanded responds a lot to a change in price Inelastic – quantity demanded does not respond very much to a change in price Price elasticity of demand : This measures how much quantity demanded responds to a change in price
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Unformatted text preview: Determinants of elasticity:- Availability of close substitutes (the more substitutes there are available, the more elastic demand is)- Necessities vs. Luxuries- Definition of the market (between broad and narrow markets; say market for meat vs. market for t-bone steaks)- Time horizon (demand tends to be more elastic over large time horizons)...
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This note was uploaded on 09/16/2008 for the course ECON 1011 taught by Professor Azevedo during the Fall '08 term at UCM.

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