Lesson 10: Elasticity of Demand

Slides:

Advertisements

Similar presentations

Slide Copyright © 2008 Pearson Education, Inc. Publishing as Pearson Addison-Wesley.

Advertisements

Business Calculus Other Bases & Elasticity of Demand.

Demand Shifts. Law of Demand  Demand Curves shift when quantity demanded changes –Causes  Income –Normal good –Inferior good  Consumer expectations.

Chapter 5 Some Applications of Consumer Demand, and Welfare Analysis.

Interpreting Price Elasticity of Demand

A B 1.Calculate the arc own price elasticity of demand between the points A and B? 2.Is the elasticity different if your go from B to A? 3.Elastic, inelastic,

Copyright © 2004 South-Western 5 Elasticity and Its Application.

Percentage Change Demand increases from 80 to 100. % increase = = 0.25 = 25% Demand decreases from 100 to 80. % decrease = = 0.20.

Elasticities. Objectives Students will be able to Calculate the elasticity of demand. Calculate the value at which total revenue is maximized. Determine.

1 Elasticity and its Application Chapter 5 2 Price Elasticity Sensitivity of quantity demanded (or supplied) to a change in price.

1 Elasticity and its Application Chapter 5 2 Price Elasticity Sensitivity of quantity demanded (or supplied) to a change in price.

Copyright © 2006 Thomson Learning 5 Elasticity and Its Applications.

Section 14.3 Further Business Application: Elasticity of Demand.

The Incidence of Taxation. The incidence of taxation Indirect taxes.

Price Elasticity of Demand What is it (in simple language)? It’s how much buyers will respond to a change in price. It’s the percentage change in quantity.

Elasticity. Elasticity measures how sensitive one variable is to a change in another variable. –Measured in terms of percentage changes, elasticity tells.

Elasticity of demand is a measure of how consumers react to a change in price.  Demand for a good that consumers will continue to buy despite a price.

FrontPage: Give an example of 1 thing that changes quantity supplied and one that changes supply. The Last Word: Ch 5 Review due Thursday; Quiz Thursday.

1 Demand and Supply Elasticities. 2 Price Elasticity of Demand Price elasticity of demand: the percentage change in the quantity demanded that results.

PRICE/UNIT ($)QUANTITY A DEMAND SCHEDULE FOR ABC DETERGENT.

Macroeconomics Lesson 2. Topics 1. Homework 2. Review Supply and Demand 3. Floors and Ceilings 4. Elasticity.

4.3 The Elasticity of Demand Elasticity of demand describes how people react to changes in prices.

Degree to which changes in a good’s price affect the quantity demanded by consumers.

Chapter 4: Demand Section 3. Copyright © Pearson Education, Inc.Slide 2 Chapter 4, Section 3 Objectives 1.Explain how to calculate elasticity of demand.

Other Elasticities Lesson Cross-Price Elasticity of Demand The Demand for a good is often affected by the demand for other products, such as substitutes.

Elasticity of Demand D. E. Weir Lawrence Central High School.

Chapter Four: Elasticity. The Price Elasticity of Demand.

Interpreting Price Elasticity of Demand Unit 3.47.

S + ad valorem tax S P Q O Effect of a tax on the supply curve.

Effect of a tax on price and quantity S + tax S O P1P1 Q1Q1 D P Q.

Elasticity of Supply Unit 5.4. Elasticity and Supply Elasticity with supply works just like elasticity with demand. Suppliers look at the amount of change.

ELASTICITY Sensitivity to Change. Price Elasticity of Demand Sensitivity to changes in price Elastic Inelastic Elasticity & Revenue Use to determine your.

Memorise these 12 goods or services Press space bar to begin.

ECO 365 Week 1 DQ 1 What is the definition of price elasticity of demand? What is the relationship between price elasticity of demand and total revenue?

Income and Substitution Effects and Elasticity

1. Define Excise Tax Per unit tax on production =

Price Elasticity of Demand

Elasticity of Demand.

Test Yourself Calculate the arc own price elasticity of demand between the points A and B? Is the elasticity different if your go from B to A? Elastic,

Price Elasticity of Demand

Elasticity of Supply.

Chapter 11 Additional Derivative Topics

Increase in total revenue Decrease in total revenue

Elasticity & Price.

© EMC Publishing, LLC.

ELASTICITY Sensitivity to Change.

Demand Elasticity: Chapter 4 Section 3.

Further Business Applications

Elasticity of Demand Chapter 4 Section 3.

Chapter 4: Applications Using Demand and Supply

Economics Chapter 4 Review.

Determinants of Demand

Application: The Costs of Taxation

Lesson 9: Marginal Analysis

Lesson 6.5 Percents of Increase and Decrease

Change in Demand.

The Elasticity of Demand (Own-Price)

Review What is the law of Demand?

DRQ #4 AGEC 317 4pts September 12, 2013

Who Wants to be an Equationaire?. Who Wants to be an Equationaire?

MATH 1311 Section 2.2.

MATH 1310 Section 2.8.

Chapter 4 Changes in Demand.

MATH 1310 Section 2.8.

MATH 1310 Section 2.8.

MATH 1310 Section 2.8.

EXHIBIT 1 The Impact of a Decrease in Price on Total Revenue

Application: The Costs of Taxation

Elasticity of Demand Unit 2.

Presentation transcript:

Lesson 10: Elasticity of Demand MATH 1314 Lesson 10: Elasticity of Demand

Revenue Response To Elasticity

Note: The demand function must be solved for x, in terms of p. -(p*f'(p))/f(p) simplify(g(p))

Popper 9: For the following, consider a product with the demand function of: x = f(p) = 1000 – 5p Find f’(p) 995p b. -5 c. -5p d. 1000p 2. Set up the elasticity function: a. 5p/(1000-5p) b. -5p/(1000-5p) c. 5/(1000-5p) 3. Simplify the elasticity function a. p/(1000-p) b. 1/200 c. p/(200-p) d. p/195

Popper 9 Continued: 4. Evaluate the elasticity function at p = 50 2 b. 0.5 c. 0.333 d. 3 5. Determine elasticity at p = 50 demand is elastic b. demand is inelastic 6. Interpret results for p = 50 An increase in price will decrease demand An increase in price will increase demand An increase in price will not affect demand