Chapter 5: Elasticity. Elasticity A general concept used to quantify the response in one variable when another variable changes.

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Presentation transcript:

Chapter 5: Elasticity

Elasticity A general concept used to quantify the response in one variable when another variable changes

Price Elasticity of Demand

Price Elasticity of Demand (cont.) Types of Elasticity i. perfectly inelastic demand ii. inelastic demand iii. unitary elasticity iv. elastic demand v. perfectly elastic demand

Price Elasticity of Demand (cont.)

Calculating Elasticities

Calculating Elasticities (cont.)

The Determinants of Demand Elasticity i. Availability of Substitutes ii. The Importance of Being Unimportant iii. The Time Dimension

Other Important Elasticities

Other Important Elasticities (cont.)