Change in Prices chapter

Elasticity

Big changes in QD based how the price change

Inelasticity

Little to no change when price changes

Is this Elasticity or Inelastic?

Inelastic

Is this elasticity or inelasticity?

Elastic

what are the parts of the Midpoint Equation

Top part: Price 1 Price 2

Bottom part: Price 1+ Price 2 (Midpoint)

Division: number of points

Deconstruct the Midpoint Equation for Price

Deconstruct the Midpoint Equation QD

Elasticity Demand Equation

what makes demand more elastic?

Substitutability!! The fact that there are more options in the market

what make more elastic or inelastic??

Sportify - Apple Music

Bloom - Celsius

less elastic

water

all energy Drinks

What is total Revenue?

what sellers earn!! <P >Q

How do you measure Total Revenue?

Multiply old Price by Old Quantity.

Then multiply New price and New Quantity

Cross-Price Elasticity

% of change in Quantity of a good ÷ % of change in Price of good

Sign Matter (Cross -Price Elasticity)

(+) —> substitutes

(-) —> complements

Example of Bar of Cross- Price Elasticity

Income Elasticity

% of change in Quantity Demand ÷ % of change in income (QD^ Income^)

Income Elasticity (sign)

(+) = Normal Good

(-) = Inferior Good

Income Elasticity (bar)

Price Elasticity Demand

How much do sellers sell…

Es = % of change in Quantity Supply ÷ % of change in Price

Price Elasticity Demand

Price is Positive Quantity Supply is positive

What makes supply elastic or inelastic?

Storable and Perishable

Easy Input and Scarse

Spare capacity and at capacity

Easy entryy and Costly entry

More time and less time