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9.16.10 Econ - demanded on Microsoft Word or something...

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9.16.10 Economics Notes Elasticity Elasticity of demand = Percent of change in quantity for some good / percent of change in quantity Variation of elasticity: Supply Elasticity – The degree to which a price change for an item results from a unit change in supply. Supply elasticity is equal to percent change in quantity divided by percent change in price. Income Elasticity – measure of popping in income for price. (P becomes income) Market Share elasticity – Advertising elascity (P becomes advantage budget) – Cross Elasticity – has 2 goods involved. Ex. If we raised the price of platform software, what’s the effect on the quantity
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Unformatted text preview: demanded on Microsoft Word or something Price Elasticity of Demand Taxonomy Perfectly Elastic Demand Elasticity = negative infinity Elastic Demand – negative infinity < Elasticicity < -1 Unit elastic demand – Elasticity = -1 Inelastic demand - -1 < Elasticity < 0 Perfectly inelastic demand Elasticity = 0 Total revenue is Price X Quantity Elastic Demand curve is one where you raise the price, the total revenue goes up. If you reduce the price, the total revenue spent on that product with increase Inelastic is opposite. Raise price, total revenue goes up. Price goes down, total revenue goes down....
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