econ 211 lecture 7

# Econ 211 lecture 7 - Econ 211 More elasticity stuff Lecture 7 Patrick McLaughlin The spectrum of own-price elasticity of demand Perfectly inelastic

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Econ 211 Lecture 7 Patrick McLaughlin More elasticity stuff The spectrum of own-price elasticity of demand: Perfectly inelastic demand : quantity demanded remains constant regardless of price. There are NO perfectly inelastic demand curves, because of budget constraints. Insulin is very inelastic. Elasticity = 0 Graph: Inelastic demand : The percentage change in quantity demanded is less than the percentage change in price. Oil = 0.05, food=0.12, housing = 0.55, tobacco = 0.61. Graph: Unit elastic demand : percentage change in quantity demanded equals the percentage change in price. Transportation services = 1.03, Gas, electricity, and water = 0.92. The curved one: On a straight d-curve: Elastic demand : percentage change in quantity demanded is greater than the percentage change in price. Automobiles: 1.14, furniture: 1.26, electronics: 1.39 Page 1 of 5 Updated: 5/11/2009

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Econ 211 Lecture 7 Patrick McLaughlin Graph: Perfectly elastic demand : quantity demanded changes by an infinitely large percentage in response to a (infinitely) tiny price change. Soft drinks from two side-by-side vending machines have almost infinite elasticity. They’re the same drinks (perfect substitutes). If they have same price, people will randomly pick one or the other. If one has a price that is slightly higher than the other, everyone (except for the absent-minded or blind) will pick the cheaper one. Graph:
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## This note was uploaded on 04/09/2008 for the course ECON 211 taught by Professor Johnson during the Spring '07 term at Clemson.

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Econ 211 lecture 7 - Econ 211 More elasticity stuff Lecture 7 Patrick McLaughlin The spectrum of own-price elasticity of demand Perfectly inelastic

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