ln6_priceandrevenue

ln6_priceandrevenue - Lecture 6: Price and Revenue...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Lecture 6: Price and Revenue Elasticity 1. Although demand curves are downward sloping and supply curves are upward sloping, their degree of "steepness" or "flatness" can vary. 2. What does this mean? A "steep" demand curve, like: 0 20 40 60 80 100 120 10 20 30 40 50 quantity price means consumers don't change their purchasing behavior as much as with a more "flat" demand curve like: 0 20 40 60 80 100 120 10 20 30 40 50 quantity
Background image of page 1

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

View Full DocumentRight Arrow Icon
2 Likewise, with a "steep" supply curve, like: 0 20 40 60 80 100 120 10 20 30 40 50 quantity price businesses don't change their production as much when price changes as with a more "flat supply curve like: 0 10 20 30 40 50 60 70 80 10 20 30 40 50 quantity
Background image of page 2
3 Steep demand curves are more likely with "necessities", and "flat" demand curves are more likely with "luxuries". A steep supply curve is more likely for products or services that take a long time to develop (pharmaceuticals, surgeons, electricity), whereas a flat supply curve is more likely for products or services that can be quickly produced (food, clothes). 3. Economists have developed measures of the relative steepness or flatness of demand and supply curves. For demand curves, the measure is called price elasticity of demand. a.
Background image of page 3

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

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/12/2008 for the course HIST 203 taught by Professor James during the Spring '08 term at N.C. State.

Page1 / 5

ln6_priceandrevenue - Lecture 6: Price and Revenue...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online