Price Elasticity of Demand More Demand Elasticities Price Elasticity of Supply Chapter 4: Elasticity Econ 102: Introduction to Microeconomics Econ 102: Introduction to Microeconomics Chapter 4: Elasticity Price Elasticity of Demand More Demand Elasticities Goals of this class Price Elasticity of Supply Goals of this class 2/ 19 Expand on supply and demand: how much do quantities change in responses to: changes in price? changes in income? changes in price of related goods? Learn implications for total revenue, taxes. Econ 102: Introduction to Microeconomics Chapter 4: Elasticity Price Elasticity of Demand More Demand Elasticities Goals of this class Price Elasticity of Supply Goals of this class 2/ 19 Expand on supply and demand: how much do quantities change in responses to: changes in price? changes in income? changes in price of related goods? Learn implications for total revenue, taxes. Econ 102: Introduction to Microeconomics Chapter 4: Elasticity Price Elasticity of Demand More Demand Elasticities Goals of this class Price Elasticity of Supply Goals of this class 2/ 19 Expand on supply and demand: how much do quantities change in responses to: changes in price? changes in income? changes in price of related goods? Learn implications for total revenue, taxes. Econ 102: Introduction to Microeconomics Chapter 4: Elasticity Price Elasticity of Demand More Demand Elasticities Goals of this class Price Elasticity of Supply Goals of this class 2/ 19 Expand on supply and demand: how much do quantities change in responses to: changes in price? changes in income? changes in price of related goods? Learn implications for total revenue, taxes. Econ 102: Introduction to Microeconomics Chapter 4: Elasticity Price Elasticity of Demand More Demand Elasticities Goals of this class Price Elasticity of Supply Goals of this class 2/ 19 Expand on supply and demand: how much do quantities change in responses to: changes in price? changes in income? changes in price of related goods? Learn implications for total revenue, taxes. Econ 102: Introduction to Microeconomics Chapter 4: Elasticity Computing Elasticity Price Elasticity of Demand Elastic vs. Inelastic Demand More Demand Elasticities Total Revenue Price Elasticity of Supply Determinants of Elasticity Elasticity 3/ 19 Recall law of demand: all other things remaining equal, the higher the price of the good, the lower is the quantity demanded. Price elasticity of demand: Answers how responsive demand is to changes in price. When the price increases by 1%, by how much does the quantity demanded decrease? Formula: Perc. Change in Quantity Demanded Price elasticity of dem. = Perc. change in price Econ 102: Introduction to Microeconomics Chapter 4: Elasticity Computing Elasticity Price Elasticity of Demand Elastic vs. Inelastic Demand More Demand Elasticities Total Revenue Price Elasticity of Supply Determinants of Elasticity Elasticity 3/ 19 Recall law of demand: all other things remaining equal, the higher the price of the good, the lower is the quantity demanded. Price elasticity of demand: Answers how responsive demand is to changes in price. When the price increases by 1%, by how much does the quantity demanded decrease? Formula: Perc. Change in Quantity Demanded Price elasticity of dem. = Perc. change in price Econ 102: Introduction to Microeconomics Chapter 4: Elasticity Computing Elasticity Price Elasticity of Demand Elastic vs. Inelastic Demand More Demand Elasticities Total Revenue Price Elasticity of Supply Determinants of Elasticity Elasticity 3/ 19 Recall law of demand: all other things remaining equal, the higher the price of the good, the lower is the quantity demanded. Price elasticity of demand: Answers how responsive demand is to changes in price. When the price increases by 1%, by how much does the quantity demanded decrease? Formula: Perc. Change in Quantity Demanded Price elasticity of dem. = Perc. change in price Econ 102: Introduction to Microeconomics Chapter 4: Elasticity Computing Elasticity Price Elasticity of Demand Elastic vs. Inelastic Demand More Demand Elasticities Total Revenue Price Elasticity of Supply Determinants of Elasticity Elasticity 3/ 19 Recall law of demand: all other things remaining equal, the higher the price of the good, the lower is the quantity demanded. Price elasticity of demand: Answers how responsive demand is to changes in price. When the price increases by 1%, by how much does the quantity demanded decrease? Formula: Perc. Change in Quantity Demanded Price elasticity of dem. = Perc. change in price Econ 102: Introduction to Microeconomics Chapter 4: Elasticity