Computing the Price Elasticity of demand (100-50) Price (100+50/2 (4.00-500 (400+500/2 5 Demand 67 percent 22 percen° Demand is price elastic 50 100 Quantity Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Computing the Price Elasticity of Demand Demand is price elastic $5 4 Demand 0 100 Quantity Price 50 -3 -22 percent 67 percent (4.00 5.00)/2 (4.00 -5.00) (100 50)/2 (100 -50) ED = = + + =
Ranges of Elasticity Perfectly Inelastic Quantity demanded does not respond to price changes Perfectly Elastic Quantity demanded changes infinitely with any change in price. Unit elastic Quantity demanded changes by the same percentage as the price. Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Ranges of Elasticity Perfectly Inelastic Quantity demanded does not respond to price changes. Perfectly Elastic Quantity demanded changes infinitely with any change in price. Unit Elastic Quantity demanded changes by the same percentage as the price
A Variety of Demand Curves Because the price elasticity of demand measures how much quantity demanded responds to the price, it is closely related to the slope of the demand curve Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. A Variety of Demand Curves Because the price elasticity of demand measures how much quantity demanded responds to the price, it is closely related to the slope of the demand curve
Perfectly Inelastic Demand Elasticity equals 0 Price Demand 1An$5|-………… Increase In price. 4 100 Quantity 2. leaves the quantity demanded unchanged Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Perfectly Inelastic Demand - Elasticity equals 0 Quantity Price 4 $5 Demand 100 2. ...leaves the quantity demanded unchanged. 1. An increase in price
Inelastic Demand Elasticity is less than 1 Price 1.A22%$5 Increase In price 4 Demand 90100 Quantity 2.leads to a 11% decrease in quantity Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Inelastic Demand - Elasticity is less than 1 Quantity Price 4 1. A 22% $5 increase in price... Demand 90 100 2. ...leads to a 11% decrease in quantity