Economics chapter 4 notes

Economics Chapter 4 Notes
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Unformatted text preview: Economics Chapter 4 Notes 4.1 Price Elasticity of Demand Elastic: when quantity demanded is quite responsive to changes in price, Inelastic: when quantity demanded is relatively unresponsive to changes in price. Price Elasticity of Demand: a measure of the responsiveness of quantity demanded to a change in the commoditys own price. o N= (percentage change in quantity demanded) / (percentage change in price) **percent changes are based on averages (New Original) / (Average) The more responsive quantity demanded, the large the N value. Elasticity is 0 when a price change leads to no change in quantity demanded. o Vertical Demand Curve Elasticity is very large when the demand curve is almost or is horizontal. Inelastic Demand: when the percentage change in quantity demanded is less than the percentage change in price o Elasticity is LESS than 1 Elastic Demand: when the percentage change in quantity is greater than the percentage change in price...
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