Chapter 20 Terms 102 - Price Elasticity: Elasticity means...

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Price Elasticity: Elasticity means responsiveness. Price Elasticity of Demand: The responsiveness of the quantity demanded of a commodity to changes in its price. The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. 1. Price elasticity of demand will always be negative. The negative sign is ignored. Price Elasticity Ranges: A good has an elastic demand whenever the price elasticity of demand is greater than 1. A good has unit elastic demand whenever the price elasticity of demand is equal to 1. A good has inelastic demand whenever the price elasticity of demand is less than 1. Extreme Elasticities: Perfectly inelastic demand represents total unresponsiveness of quantity demanded to price changes, or zero elasticity, while absolutely or perfectly elastic demand, represents total responsiveness of quantity demanded to price changes. Measuring the Cross Price Elasticity of Demand:
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This note was uploaded on 06/06/2011 for the course ECON 102 taught by Professor Dsilvia during the Fall '11 term at Moraine Valley Community College.

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Chapter 20 Terms 102 - Price Elasticity: Elasticity means...

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