Elasticity of Demand Flashcards
1
Q
learning outcomes
A
Define elasticity of demand and explain in your own words.
Know and use the formula.
Identify elastic and inelastic on a graph.
2
Q
Elasticity of demand
A
A measure of how responsive/sensitive demanders are to price.
Elasticity = Percentage change in quantity demanded/percentage change in price
or
%ΔQD/%ΔP
3
Q
Types of elasticity
A
Unit elastic → elasticity=1
Inelastic → elasticity<1
Elastic → elasticity>1
4
Q
Determinants of elasticity
A
_ Availability of substitutes
_Width of the market defined
_Length of time in question
_Proportion of income spent on the product
5
Q
On the diagram
A
Revenue=price x quantity
