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(Demand)
Aji Raditya
week_06
INTRODUCTION
'The prices of cars increase by 5%'
'The prices of computers decrease by 8%'
1. An $5
increase
in price... 4
100 Quantity
2. ...leaves the quantity demanded unchanged.
Inelastic Demand
- Elasticity is less than 1
Price
1. A 25% $5
increase
in price... 4
Demand
90 100 Quantity
2. ...leads to a 10% decrease in quantity.
Unit Elastic Demand
- Elasticity equals 1
Price
1. A 25% $5
increase
in price... 4
Demand
75 100 Quantity
2. ...leads to a 25% decrease in quantity.
Elastic Demand
- Elasticity is greater than 1
Price
1. A 25% $5
increase
in price... 4
Demand
50 100 Quantity
2. ...leads to a 50% decrease in quantity.
Perfectly Elastic Demand
- Elasticity equals infinity
Price
1. At any price
above $4, quantity
demanded is zero.
$4 Demand
2. At exactly $4,
consumers will
buy any quantity.
∆𝑄(%)
𝜀𝑑 =
∆𝑃(%)
∆𝑄 % = ∆𝑃 % . 𝜀𝑑
∆𝑄 % =12%.(-3)
∆𝑄 =36%
If The price increased by 12% than the quantity demanded
decreases by 36%. Demand is strongly responsive to price change
and is described as elastic demand.
Question
Question
Given the demand function 𝑃 = 60 − 𝑄 2 .
Calculate the point elasticity of demand at P =
44.
TERIMA KASIH