Price Elasticity of
Demand: Tells how drastically buyers will cut back or increase their demand for
a good when price rises or falls.
Elastic Demand: When demand changes greatly due to change in price.
“Wants”: Find substitutes
E is greater than 1
Inelastic Demand: Demand will not change even if the price changes.
“Needs”: Few substitutes (Ex: gas, milk, salt)
E is less than 1
Unit or Unitary Elastic
E = 1
1. % ∆ in Quantity
(New Quantity- Old Quantity)/ Old Quantity
2. % ∆ in Price
(New Price- Old Price)/ Old Price
3. Price Elasticity
of Demand (PED)
% ∆ in Quantity/ % ∆ in Price ( Make sure to take absolute value)
=E (Inelastic or Elastic or Unitary Elastic)
i really like all of the visuals you put onto this section of your blog! it makes it super fun to read and easier to understand!! the equations are just a little clumped together so i think it makes it hard for me to understand but overall your blog is very neat and organized. :) maybe you should have a problem for each equation so its easier to understand! love you <3
ReplyDeleteIt has been difficult for me to understand how elastic and inelastic works but your visual really helped. I agree with Alice, since the equations are right on each other it's hard for me to really comprehend what is going on. Over all i really like how you formatted your notes!
ReplyDelete