Chapter4 - Chapter 4 – Elasticity Elasticity What do you...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon

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

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

Unformatted text preview: Chapter 4 – Elasticity Elasticity What do you think? Could reducing the supply of illegal drugs cause an increase in drug-related burglaries? Price Elasticity of Demand Elasticity A measure of the extent to which quantity demanded and quantity supplied respond to variations in price, income, and other factors. Price Elasticity of Demand Defined Generally A measure of the responsiveness of the quantity demanded of a good to a change in the price of that good Formally The percentage change in the quantity demanded that results from a 1 percent change in its price Price Elasticity of Demand Measuring Price Elasticity of Demand Price in Change Percentage Demanded Quantity in Change Percentage Assume The price of pork falls by 2% and the quantity demanded increases by 6% Then the price elasticity of demand for pork is Price Elasticity of Demand 3 % 2 % 6- =- Price Elasticity of Demand Determinants of Price Elasticity of Demand Substitution possibilities Budget share Time Price Elasticity of Demand...
View Full Document

This note was uploaded on 07/04/2009 for the course ECON econ202 taught by Professor Smith during the Spring '09 term at Allen County Comm College.

Page1 / 23

Chapter4 - Chapter 4 – Elasticity Elasticity What do you...

This preview shows document pages 1 - 8. Sign up to view the full document.

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