EC201-Chp6

# EC201-Chp6 - EC201 Chapter 6 Terms Elasticity A measure of...

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EC201- Chapter 6 Terms Elasticity - A measure of how much one economic variable responds to changes in another economic variable. Price Elasticity of Demand - Measured by the responsiveness of the quantity demanded to a change in price. Percentage Change in Quantity Demanded ÷ Percentage Change in Price Elastic Demand - Demand is elastic when the percentage change in quantity demanded is greater than the percentage change in price. Price Elasticity > 1 in Abs. Value Inelastic Demand - Demand is inelastic when the percentage change in quantity demanded is less than the percentage change in price. Price Elasticity < 1 in Abs. Value Unit-Elastic Demand - Demand is unit-elastic when the percentage is equal to the percentage change in price. Price Elasticity = 1 in Abs. Value Price Elasticity of Demand = (Q2-Q1)÷((Q1+Q2)÷2) ÷ (P2-P1)÷((P1+P2)÷2) Perfectly Inelastic Demand - Quantity demanded is completely unresponsive to price.

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