Chap004.3 - A Graphical Interpretation of Price Elasticity...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
3 Chapter 4: Elasticity Slide 13 A Graphical Interpretation of Price Elasticity ± For small changes in price P Δ P Q Δ Q elasticity Price = = Where Q is the original quantity and P is the original price Chapter 4: Elasticity Slide 14 A Graphical Interpretation of Price Elasticity ± Example z Originally ² Price ( P ) = $100 ² Quantity ( Q ) = 20 z New ² Price ( P ) = $105 ² Quantity ( Q ) = 15 Elastic : 5 5 25 100 5 20 5 = = = Chapter 4: Elasticity Slide 15 A Graphical Interpretation of Price Elasticity of Demand Quantity Price P D A Q P - P Q + Q Q P = slope Q P A 1 at elasticity ice Pr Chapter 4: Elasticity Slide 16 Calculating Price Elasticity of Demand 20 Quantity 1 D A 23 45 16 12 8 4 4 5 20 intercept horizontal intercept vertical
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.
Ask a homework question - tutors are online