H05Elasticity - 12 Price Elasticity of Demand price...

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unit-free measure negative number measures movement along demand curve mid-point formula, average of p and q Price Elasticity of Demand Price Elasticity of Demand price elasticity of demand e d measure of sensitivity of quantity demanded to price more elastic means more sensitive % % Q P 12 Q 100 Q P 100 P % % Q P = , where Q and P are average values Price Elasticity of Demand Price Elasticity of Demand elastic |e d | > 1 ; |% Q| > |% P| inelastic |e d | < 1 ; |% Q| < |% P| unit elastic |e d | = 1 ; |% Q| = |% P| % P = -20 % % Q = 40 % -2 -20 40 % % % % e d P Q 0 4 8 12 16 20 24 28 32 36 40 0 2 4 6 8 10 12 14 16 18 20 Price (per unit) Quantity D elastic 12 Q 100 Q P 100 P % % Q P = , where Q and P are average values Price Elasticity of Demand -.5 -20 10 % % % % e d P Q 0 4 8 12 16 20 24 28 32 36 40 0 2 4 6 8 10 12 14 16 18 20 Price (per unit) Quantity D % P = -20 % % Q = 10 % elastic |e d | > 1 ; |% Q| > |% P| inelastic |e d | < 1 ; |% Q| < |% P| unit elastic |e d | = 1 ; |% Q| = |% P| inelastic 12 Q 100 Q P 100 P % % Q P = , where Q and P are average values
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elastic |e d | > 1 ; |% Q| > |% P| Price Elasticity of Demand Price Elasticity of Demand -1 -20 20 % % % % e d P Q 0 4 8 12 16 20 24 28 32 36 40 0 2 4 6 8 10 12 14 16 18 20 Price (per unit) Quantity D % P = -20 % % Q = 20 % inelastic |e d | < 1 ; |% Q| < |% P| unit elastic |e d | = 1 ; |% Q| = |% P| unit elastic 13 Q 100 Q P 100 P % % Q P =
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This note was uploaded on 01/24/2012 for the course ECON 101 taught by Professor Gerson during the Fall '08 term at University of Michigan.

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H05Elasticity - 12 Price Elasticity of Demand price...

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