econ ppt 3
TRANSCRIPT
![Page 1: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/1.jpg)
MicroeconomicsElasticities
1
![Page 2: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/2.jpg)
Elasticities
How sensitive is a buyer to a change in price?
How sensitive is a buyer when another product changes price?How sensitive is a buyer to changes in their own income?How sensitive is a supplier to a change in price?2
![Page 3: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/3.jpg)
3
![Page 4: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/4.jpg)
Price Elasticity of Demand (PED)
P rice e las tic ity o f d em an d =P ercen tag e ch an g e in q u an tity d em an d ed
P ercen tag e ch an g e in p rice
4
Definition:A measure of the responsiveness of the demand for a product to changes in its own price.
![Page 5: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/5.jpg)
Range of PED values5
![Page 6: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/6.jpg)
Price Inelastic Demand6
![Page 7: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/7.jpg)
Price Elastic Demand7
![Page 8: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/8.jpg)
Range of PED8
![Page 9: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/9.jpg)
Extreme Cases9
![Page 10: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/10.jpg)
Perfectly Elastic Demand10
![Page 11: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/11.jpg)
Perfectly Inelastic Demand11
![Page 12: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/12.jpg)
Unit Elastic Demand12
![Page 13: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/13.jpg)
D e te rm in a n ts o f P E D
13
![Page 14: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/14.jpg)
Determinants of PEDIncome
14
![Page 15: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/15.jpg)
Determinants of PEDSubstitutes
15
![Page 16: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/16.jpg)
Determinants of PEDSubstitutes
16
![Page 17: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/17.jpg)
Cross-Elasticity of Demand (XED)17
XED = Percentage Change in Quantity Demanded for X Percentage Change in Price of
Y
Definition:The cross elasticity is a measure of the responsiveness of the demand for one product to changes in the price of another product.
![Page 18: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/18.jpg)
Range of XED values18
![Page 19: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/19.jpg)
Income Elasticity of Demand (YED)19
YED = Percentage Change in Quantity Demanded Percentage Change in
Income
Definition:The income elasticity of demand is a measure of the responsiveness of the quantity demanded to changes in real income.
![Page 20: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/20.jpg)
Types of Goods and YED20
![Page 21: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/21.jpg)
Price Elasticity of Supply21
PES = Percentage Change in Quantity Supplied Percentage Change in Price
Definition:The responsiveness of the quantity of a good supplied to changes in its price.
![Page 22: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/22.jpg)
Determinants of PESTime
22
![Page 23: Econ ppt 3](https://reader036.vdocuments.net/reader036/viewer/2022081422/5549167ab4c9056b458c293e/html5/thumbnails/23.jpg)
Determinants of PESSpare Capacity
23