Econ- Variety of Demand Curves

Econ- Variety of Demand Curves - change. B) Inelastic...

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Subject: Principles of Microeconomics Topic: The Variety of Demand Curves Main Points- Economists classify demand curves according to their elasticity. Demand is considered elastic when it is greater than one, demand is considered inelastic when it is less than one. When the elasticity is one, it is referred to as having unitary elasticity. As elasticity responds to changes in price, it is closely related to the slope of the demand curve. There is a rule of thumb that the flatter the demand curve that passes through a given point, the more price elastic the demand. There are five main descriptions of demand curves: A) Perfectly inelastic demand The demand curve is vertical. This means that no matter what the change in price, demand will never
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Unformatted text preview: change. B) Inelastic Demand The demand curve has a steep slope This means that as price changes, demand changes by a lesser amount. C) Unitary Elastic Demand The demand has an even slope This means as price changes, demand changes by the same percentage. D) Elastic Demand The demand has a flat slope This means as price changes, demand changes by a higher percentage. Perfectly elastic demand The demand curve is horizontal This means if price increases, demand will be zero. If price decreases, quantity demanded is infinite. As a memory trick: Perfectly i nelastic curves look like the letter I. obviously if it does not look like the letter I, then it is not inelastic....
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This note was uploaded on 10/17/2011 for the course ECON 2023 taught by Professor Unknown during the Fall '05 term at Arkansas.

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