{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Principles of Economics- Mankiw (5th) 93

Principles of Economics- Mankiw (5th) 93 - $4 Quantity...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
(a) Perfectly Inelastic Demand: Elasticity Equals 0 $5 4 Demand Quantity 100 0 (b) Inelastic Demand: Elasticity Is Less Than 1 $5 4 Quantity 100 0 90 Demand (c) Unit Elastic Demand: Elasticity Equals 1 $5 4 Demand Quantity 100 0 Price 80 1. An increase in price . . . 2. . . . leaves the quantity demanded unchanged. 2. . . . leads to a 22% decrease in quantity demanded. 1. A 22% increase in price . . . Price Price 2. . . . leads to an 11% decrease in quantity demanded. 1. A 22% increase in price . . . (d) Elastic Demand: Elasticity Is Greater Than 1 $5 4 Demand Quantity 100 0 Price 50 (e) Perfectly Elastic Demand: Elasticity Equals Infinity
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: $4 Quantity Price Demand 1. A 22% increase in price . . . 2. At exactly $4, consumers will buy any quantity. 1. At any price above $4, quantity demanded is zero. 2. . . . leads to a 67% decrease in quantity demanded. 3. At a price below $4, quantity demanded is infinite. Figure 5-1 T HE P RICE E LASTICITY OF D EMAND . The price elasticity of demand determines whether the demand curve is steep or flat. Note that all percentage changes are calculated using the midpoint method....
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online