Elasticity of Demand
- Elasticity of Demand: Measure of how consumers react to a change in price.
- Elastic Demand: Demand that’s very sensitive to a change in price.
- Greater than 1 (G > 1)
- Product not a necessity
- Available substitutes
- Ex) Steak, fur coat, soda
- Inelastic Demand: Demand that isn’t very sensitive to a change in price.
- Less than 1 (L < 1)
- Product is a necessity
- There are few to no substitutes
- Ex) Gas, insulin
- Unitary Elastic:
- Equal to 1 (E = 1)
- Quantity-
New Quantity – Old Quantity / Old
Quantity
- Price-
New Price – Old Price / Old Price
- Price Elasticity of Demand (PED)-
% Change in Quantity / % Change in
Price
Overall, I think you did a good job of providing all of the information. One thing that I think is key, and that is missing is adding the terms "In a perfect society" when it comes to unitary elastic because it lets us know that it is highly unlikely to occur. this helps us further understand these concepts. Also, i like that you get right to the point, but in some instances a bit of specificity will help to further understand this concept.
ReplyDelete