# chap6 - Chapter6:Elasticity Elasticity...

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Chapter 6: Elasticity

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Elasticity A measure of the responsiveness of  one variable (usually quantity  demanded or supplied) to a change in  another variable Most commonly used elasticity: price  elasticity of demand, defined as: Price elasticity of demand =
Price elasticity of demand Demand is said to be: elastic when Ed > 1, unit elastic when Ed = 1, and inelastic when Ed < 1.

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Perfectly elastic demand
Perfectly inelastic demand

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Elasticity & slope a price increase from \$1 to \$2 represents a 100%  increase in price, a price increase from \$2 to \$3 represents a 50%  increase in price, a price increase from \$3 to \$4 represents a 33%  increase in price, and a price increase from \$10 to \$11 represents a 10%  increase in price.  Notice that, even though the price increases by \$1 in  each case, the percentage change in price becomes  smaller when the starting value is larger.
Elasticity along a linear demand  curve

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Elasticity along a linear  demand curve
Arc elasticity measure where:

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