Chapter 7 Elasticity

Chapter 7 Elasticity - Chapter 7: Elasticity Steeper the...

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Chapter 7: Elasticity Price elasticity of demand is the percentage of change in quantity demanded divided by the percentage in price Price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price = % % EdorEs change in QD or QS change in $ Demand or supply is elastic when the percentage in quantity is greater than the change in price or when Ed > 1 Demand or supply is inelastic if percentage change in quantity is less than the percentage change in price Ed<1 Inelastic supply means that quantity supplied doesn’t change much with a change in price Elastic supply means that quantity supplied changes by a larger percentage than the percentage change in price Percentages allow us to measure responsiveness independent of units, making comparisons among different goods easier Steeper the curve becomes at a given point, the less elastic is supply or demand. Perfect inelastic
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Chapter 7 Elasticity - Chapter 7: Elasticity Steeper the...

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