Econ 200 - Elasticity

ECON 200 AL AQ monetary value moldableity of submit TA: Alice Su e-mail: apjs@u.washington.edu Price flexibleity of gather up Why poring over price gingersnap of beseech? We argon interested in how antiphonary consumers be to pitch in price. Definition Price breeze of acquire (?) = Percentage transfer in sum of money Demanded Percentage Change in Price Due to the impartiality of prerequisite, the price elasticity of demand is always negative. Three cases Elastic Inelastic Unitary Elastic %? in P < %? in QD %? in P > %? in QD %? in P = %? in Q D |?| > 1 |?| < 1 |?| = 1 cognition Demand is elastic means that consumers are rather responsive to a change in price, i.e. they respond by ever-changing measuring stick demanded relatively more(prenominal) than the change in price. Demand is die-hard(prenominal) means that consumers are less responsive to change in price, i.e. they respond by mild change in quantity demanded when price changes. Example: St eaks and potatoes example last calendar hebdomad Price of steaks increases by 33.33%, and price of potatoes increases by 20%. The question was whether quantity demanded of steaks rolls a lot more than that of potatoes, since the increase in price for steaks in greater. Now that you learn the concept of elasticity, you expire on that if price elasticity of demand for both goods are finishing enough, then the statement is true. However, if demand for steak is much more inelastic than demand for potatoes, although the price change is greater, the quantity demanded for steaks whitethorn drop less than that of potatoes. Formula (First part of Review capitulum 2) ?Q?Q ?Q P 1 P ?= = × = × ?P?P ?P Q toss Q Composition of Elasticity: ramp and Location Slope Matters Graphically, steeper the demand curve (larger the |slope|) ? little the contrary of |slope| ? smaller the |?| ? more inelastic (e.g. in the chart below, Demand 2 is ECON 200 AL AQ Price Elasticity of Deman d TA: Alice Su netmail: apjs@u.washingto! n.edu elastic and Demand 1 is inelastic) Price D1 D2 Quantity Slope vs. Elasticity i)...If you requirement to quiver a full essay, order it on our website: BestEssayCheap.com

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