This document discusses concept application assessment of price elasticity of demand. It explains that price elasticity of demand measures consumer responsiveness or sensitivity to price changes. When prices increase modestly and cause large changes in quantity purchased, demand is relatively elastic. The document also discusses using percentage changes in price elasticity and how inelastic demand is shown as a line parallel to the vertical axis, while perfectly elastic demand is shown as a line parallel to the horizontal axis. Charts in an attached PowerPoint further illustrate elastic and inelastic demand graphs.
This document discusses concept application assessment of price elasticity of demand. It explains that price elasticity of demand measures consumer responsiveness or sensitivity to price changes. When prices increase modestly and cause large changes in quantity purchased, demand is relatively elastic. The document also discusses using percentage changes in price elasticity and how inelastic demand is shown as a line parallel to the vertical axis, while perfectly elastic demand is shown as a line parallel to the horizontal axis. Charts in an attached PowerPoint further illustrate elastic and inelastic demand graphs.
This document discusses concept application assessment of price elasticity of demand. It explains that price elasticity of demand measures consumer responsiveness or sensitivity to price changes. When prices increase modestly and cause large changes in quantity purchased, demand is relatively elastic. The document also discusses using percentage changes in price elasticity and how inelastic demand is shown as a line parallel to the vertical axis, while perfectly elastic demand is shown as a line parallel to the horizontal axis. Charts in an attached PowerPoint further illustrate elastic and inelastic demand graphs.
ECO/561 May 26, 2014 Igbodipe CONCEPT APPLICATION ASSESSMENT 2 Concept Application Assessment Price elasticity o de!and is !easured "y a #roduct $Pri!a "ottle %ater #rice increase& increases' and the consu!ers res#onsi(eness or sensiti(ity to a #rice change) Many consu!ers react to higher #rices e*a!#le at restaurant dishes' su#er!ar+ets oods #rice changes) ,hen there a little #rice in an ite! the consu!ers !ay not react' ho%e(er %hen there are !odest #rice changes %hich cause a large changes in the -uantity #urchased consu!ers are sensiti(e to the need) According to econo!ists this is +no%n as the de!and or #roducts is relati(ely elastic or si!#ly elastic $McConnell' .rue' / 0lynn 2112&) Econo!ics also allo% "usinesses to use a #ercentage 3 o #rice elasticity de!and4 it can "e used to or a"solute change %hich is the choice o units that can ar"itrarily aect a "usiness i!#ression o the "uyer res#onsi(eness) E*a!#le' a cu# o ice crea! a the oot"all ga!e is reduced ro! 56 to 57 and the consu!ers increase their #urchases ro! 81 to 111 "ags' it then see!s that the consu!ers are -uite sensiti(e to the #rice changes and it is thereore that de!and is elastic) Another %ay to use #ercentage is correctly co!#aring consu!er res#onsi(eness to changes in the #rices o dierent #roducts) More %ays to (ie% the #rocess and calculation o a #rice elasticity de!and can "e (ie%ed on the attached #o%er #oint $McConnell' .rue' / 0lynn 2112&) Inelastic de!and is #erect %hen it is gra#hed as a line #arallel to the (ertical a*is4 and #erectly elastic de!and is sho%n "y a line a"o(e and %hich is then #arallel to the hori9ontal a*is) Chart :; on the Po%erPoint sho% the gra#h o a #erectly inelastic de!and along %ith chart :< sho%s a elasticity gra#h) CONCEPT APPLICATION ASSESSMENT 7 Ree!ence McConnell, C" R", #"$", % &lynn, #" M" '200()" Economics: Principles, problems, and policies '1*t+ ed")" ,oston, MA- Mc.!a/01ill I!/in" 2o/e!2oint attac+ed / ECO0561 5/26/2014"