Chapter Four - Book Notes..docx - Chapter Four Elasticity...

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Chapter Four: Elasticity – BOOK NOTES. Price Elasticity of Demand. The amount the curve changes by depends on the responsiveness of the quantity  demanded of a good to change in its price o If the quantity demanded of a good is not very responsive to a change in price, the price rises a lot and the equilibrium quantity doesn’t change much o If the quantity demanded is very responsive to a change in price, the price barely  rises and the equilibrium quantity changes a lot Think about responsiveness in terms of the slope of the demand curve o Steep curve   quantity demanded of the good is not  very responsive to a change  in price o Flat(ter) curve  quantity demanded is  very responsive to a change in price Slope of the demand curve depends on the units in which we measure the price and  quantity o
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  • Spring '10
  • Olson
  • curve changes

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