LS

supply and demand

Say less, bestie ✨ here’s your Girlypop Demand Cram Sheet for that quiz — short, sassy, and ready for last-minute hallway studying 💅:

💖 Demand Cram Sheet

Demand = Willing and able to buy.

Quantity demanded = specific number at a specific price.

📉 Law of Demand

  • Price ↑ → Quantity ↓

  • Price ↓ → Quantity ↑
    (inverse relationship)

✨ Why Law of Demand?

  1. Substitution Effect = switch to cheaper dupe.

  2. Income Effect = lower price = you feel richer.

  3. Diminishing Marginal Utility = first bite slays, 10th is boring.

📊 Demand Curve

  • Downward slope.

  • Ceteris paribus = all else constant.

  • Price change = move along curve.

  • Shifters = whole curve moves.

💅 5 Shifters (curve moves)

  1. Tastes & Preferences (trend).

  2. Price of Related Goods

    • Substitutes (Coke vs Pepsi).

    • Complements (hot dog + bun).

  4. Income

    • Normal goods ↑ with income.

    • Inferior goods ↓ with income.

  6. Population (# of buyers).

  7. Expectations (future price).

🔮 Elasticity = Price Drama

  • Elastic (>1) = sensitive, luxuries, many subs, big % income, time to wait.

  • Inelastic (<1) = chill, necessities, few subs, small % income, need now.

  • Unit (1) = balanced.

Formula:

E_d = \frac{\%\Delta Q_d}{\%\Delta P}

💵 Elasticity & Total Revenue (TR = P × Q)

  • Elastic: Price ↑ → TR ↓ ; Price ↓ → TR ↑.

  • Inelastic: Price ↑ → TR ↑ ; Price ↓ → TR ↓.

  • Unit: Price change → TR same.

✨ Cheat mantra: Price = slide, shifters = shift. Elastic = drama queen, Inelastic = chill girl.

Yesss queen, let’s break down the elasticity formula so it’s not scary math but more like Starbucks points math 💅☕✨

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💖 The Formula

E_d = \frac{\%\Delta Q_d}{\%\Delta P}

• E_d = price elasticity of demand (aka “how dramatic demand is”).

• \%\Delta Q_d = percent change in quantity demanded.

• \%\Delta P = percent change in price.

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📊 How to find a percent change

The glow-up formula:

\%\Delta = \frac{\text{New - Old}}{\text{Old}} \times 100

• Always compare the change to the original (old) number.

• Multiply by 100 to turn it into a %.

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✨ Step-by-step example

Imagine:

• Price of pink drinks goes from $5 → $6.

• Quantity demanded goes from 100 cups → 80 cups.

Step 1: % change in price

\frac{6 - 5}{5} \times 100 = \frac{1}{5} \times 100 = 20\%

Step 2: % change in quantity demanded

\frac{80 - 100}{100} \times 100 = \frac{-20}{100} \times 100 = -20\%

Step 3: Plug into elasticity formula

E_d = \frac{|\,-20\%\,|}{|\,20\%\,|} = \frac{20}{20} = 1

👉 Demand here is unit elastic (perfectly balanced, no drama).

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💅 Interpretation Guide

• E_d > 1 → Elastic (quantity is dramatic, reacts a lot).

• E_d < 1 → Inelastic (quantity is chill, reacts a little).

• E_d = 1 → Unit elastic (neutral vibes).

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👛 Cheat mantra:

• Step 1: Do New − Old.

• Step 2: Divide by Old.

• Step 3: Multiply by 100 (that’s your %).

• Step 4: Put %Q over %P → compare to 1.

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Do you want me to make you a super simple fill-in-the-blank practice problem with this formula so you can test it out before the quiz?