1.2K views

Uploaded by Abril Rmz

- Elasticity of Demand
- Elasticity of Demand and Supply Lecture Notes
- CCP502
- Imperial BusEcon 2016 S1 S2
- Slides Chapter 5 Microeconomy
- Elasticity
- 433.full
- Demand
- CCP502
- 6351_01_que_20060118
- Electricity Demand and Tariff-1
- Supply and Elasticity of Demand
- Economics
- answers of quiz
- APPLICATION OF PED.pptx
- Economics Project Fertilisersfinal Print
- Elasticity Notes
- ECON1000 Midterm 2012S Version B
- Marketing Discussion chp14
- 1306170498important Model Question Papers for Mba 1st Semister

You are on page 1of 8

quantity demanded responds to a change in price.

relatively larger change in quantity demanded.

relatively smaller change in the quantity demanded.

Demand Elasticity

Variation of Elastic Unit Elastic Inelastic

Price > 1 = 1 <1

Increase of Decrease of Expense Increase of

price Expense doesn’t change Expense

Decrease of Increase of Expense Decrease of

price Expense doesn’t change Expense

Initial Price = P1

Final Price = P2

Initial Quantity = Q1

Final Quantity= Q2

(Q2 - Q1)

PEoD = (Q1 + Q2) / 2

(P2 – P1)

(P1 + P2) / 2

absolute value, so we ignore the negative value.

Examples:

PEoD = (Q1 + Q2) / 2 = (2+4) /2 = 3 = .666 = -1.6

(P2 – P1) (2-3) -1 -.4

(P1 + P2) / 2 (3+2)/2 2.5

= | -1.6 | = 1.6

Here you can prove the demand is inelastic because:

PEoD = (Q1 + Q2) / 2 = (2+2.5) /2 = 2.25 = .2222 = -.55

(P2 – P1) (2-3) -1 -.4

(P1 + P2) / 2 (3+2)/2 2.5

= | -.55 | = .55

Here you can prove the demand is unit elastic because:

PEoD = (Q1 + Q2) / 2 = (2+3) /2 = 2.5 = 4 = -1

(P2 – P1) (2-3) -1 -4

(P1 + P2) / 2 (3+2)/2 2.5

= | -1 | = 1

Answers to Homework

Airlines in the United States generally do not offer reduced

round-trip airfares during holidays such as Easter,

Thanksgiving, and Christmas. What can you conclude about

the elasticity of demand for airplane travel at these times?

Inelastic. If you are willing to travel by plane in these dates, you will

buy the ticket no matter which is the price.

Inelastic demand says that an increase in price means an increase

in expense, and a decrease in price means a decrease in expense.

$2.00 to $2.50. As a result, its sales of hamburgers fell from 200

per day to 180 per day. Was the demand for its hamburgers

elastic or inelastic? Why?

the increase in price caused an increase in total expenditure.

Proof:

Q1= 200

Q2= 180

P1= 2

P2= 2.5

(Q2 - Q1)

PEoD = (Q1 + Q2) / 2

(P2 – P1)

(P1 + P2) / 2

PEoD = (200 + 180) / 2 = 190 = -.1053 = -.474

(2.5 – 2) .5 .2222

(2 + 2.5) / 2 2.25

= | -.474 | = .474

Formula to Determine Price Elasticity of Supply

Q2 = The New Quantity Supplied

P1 = Initial Price

P2 = New Price

(Q2-Q1)

PEoS= (Q2+Q1)/2

(P2 – P1)

(P2 + P1)/2

absolute value, so we ignore the negative value.

Type of elasticity

due to a change in price

Examples:

(Q2-Q1) (6-2) 4

PEoS= (Q2+Q1)/2 = (6+2) /2 = 4 = 1 = 1.5

(P2 – P1) (2-1) 1 .666

(P2 + P1)/2 (2+1) /2 1.5

1.5 > 1 , it is elastic supply

(Q2-Q1) (3-2) 1

PEoS= (Q2+Q1)/2 = (3+2) /2 = 2.5 = .4 = .6

(P2 – P1) (2-1) 1 .666

(P2 + P1)/2 (2+1) /2 1.5

.6 < 1 , it is inelastic supply

(Q2-Q1) (4-2) 2

PEoS= (Q2+Q1)/2 = (4+2) /2 = 3= .666 = 1

(P2 – P1) (2-1) 1 .666

(P2 + P1)/2 (2+1) /2 1.5

- Elasticity of DemandUploaded byDonasco Casinoo Chris
- Elasticity of Demand and Supply Lecture NotesUploaded byNastya Curcubet
- CCP502Uploaded byapi-3849444
- Imperial BusEcon 2016 S1 S2Uploaded byIgnacio Tovar
- Slides Chapter 5 MicroeconomyUploaded byDanijel Buzov
- ElasticityUploaded byShir Lee
- 433.fullUploaded byMalvika mulmi
- DemandUploaded byRaymond Phillip Maria Datuon
- CCP502Uploaded byapi-3849444
- 6351_01_que_20060118Uploaded byJimmy Hkl
- Electricity Demand and Tariff-1Uploaded byKhuram Shahzad Cheema
- Supply and Elasticity of DemandUploaded bysuru2331
- EconomicsUploaded byMuhammad M. Islam
- answers of quizUploaded bymitulptl111
- APPLICATION OF PED.pptxUploaded bymohdportman
- Economics Project Fertilisersfinal PrintUploaded byanshulb1986
- Elasticity NotesUploaded byshooter21198
- ECON1000 Midterm 2012S Version BUploaded byexamkiller
- Marketing Discussion chp14Uploaded byhus 20 10
- 1306170498important Model Question Papers for Mba 1st SemisterUploaded byraajsamala
- A Brief Review on Microeconomics PrinciplesUploaded byDennisWarren
- MEFA Questions and AnswersUploaded byabhiram008
- Income Elasticity of DemandUploaded byHidayah Anastasya
- Price Elasticity of DemandUploaded byAzizul Kirosaki
- Air Travel Demand ElasticitiesUploaded byKatia
- Managerial Economics 102Uploaded bykillerbboy
- IB Economics Exam NotesUploaded byNica Calvert
- Work AroundUploaded bySaurav Bhargav
- Demand_notesUploaded byUmesh Nihalani
- 2-1Uploaded byPriya Varenya

- Marketing AssignmentUploaded byAsif Jownally
- Customer Perception and Attitude Towards Selected Brands of 100c.c.-a Case Study of ShahabadUploaded byKaranbir Singh
- Children and Comsumer CultureUploaded byWhitney Campbell
- EVA Supply Chain Demand Planning.pdfUploaded byEmilio Torres Medina
- APICS Presentation and Questions 2011Uploaded bycypisek
- Project Report of mount shivalik brewery ltd(thunderbolt beer)Uploaded bymount shivalik
- Classification of AdvertisementUploaded byKushal Dey
- ENGLISH.docxUploaded byAdriana Bojascu
- California Milk Advisory Board CaseUploaded byLennon Design, Student.
- Sanju Marketing NotesUploaded bySanjiv Gautam
- The General Electric Case Study ÃUploaded byBilal Salameh
- EMBA Global BrochureUploaded byCharlie Roldán
- Objectives of the Business Firm 1Uploaded byrajvinder kaur
- A Dissertation ReportUploaded byRam Sharan
- 02-STRAMAN (What and Why of Strategy)Uploaded bymarjsbars
- TBChap002Uploaded byZeeNiezzz
- Shaping the ICT Banking Inovations for the FutureUploaded byK T A Priam Kasturiratna
- TPL Inception Pack Vol 3Uploaded bynayan_0725
- Impact of Advertisment on Brand Selection by Teenagers in IndiaUploaded byveena06
- Cambridge Analytica's 'Trump for President' debriefUploaded byThe Guardian
- dmartUploaded bydabli2
- Measuring Social Media performance - Noémie Moreau IkidbachianUploaded bynoemie_m_i
- CrmUploaded bySunil Verma
- Chapter 09Uploaded bychiny
- Capitalizing on the Shifting Consumer Food Value EquationUploaded byIman Nurakhmad Fajar
- 58_1_McKinsey Manual for entrepreneurs.pdfUploaded bysanthosh n prabhu
- Scdp ObermeyerUploaded bygbpiepenburg
- PestelUploaded byMiyingo Micheal
- Standardization Versus AdaptationUploaded byAD_Music
- PROJECT REPORTUploaded bySatinder Shinda