Notes for a freshmen college microeconomics course.
DEMAND AND SUPPLY ELASTICITY
I. Price Elasticity of Demand
A. Concept of Price Elasticity
The responsiveness or sensitivity of quantity
demanded to a change in price.
B. General Formula for Price Elasticity
Percentage change in quantity demanded
Percentage change in price
C. Mid-Points Formula
D. Interpreting the Elasticity Coefficient
A coefficient higher than 1 is elastic
" " lower " 1 is inelastic
" " exactly 1 is unitary
A negative coefficient implies that a lower
price results is lower quantities sold.
E. Extreme Elasticities
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