1. Elasticity Definition and Useful Applications

2. Price Elasticity of Demand Ratio of Percentage Change in Quantity Demanded to Percentage Change in Price

3. Types of Elasticity  Inelastic -- Percentage change in quantity demanded less than percentage change in price. Numerical value between 0 and -1  Elastic -- Percentage changes in quantity demanded exceeds the percentage change in price. Absolute value greater than 1  Unitary Elasticity - Numerical value equals 1.

4. Rank Elasticities uBeef uSalt uEuropean vacation uSteak uHonda Accord uDijon mustard

5. Factors Affecting Elasticity of Demand  Availability of Substitutes  Fraction of Income Spent on Good  Adjustment Time

6. Perfectly Elastic

7. Perfectly Inelastic

8. Elasticity vs Slope

9.  Slope =  P/  Q=-2  Elasticity at P=1 %DQ=(4.5-4)/4.25 %DP=(1-2)/1.5 %DQ/%DP=-.177  Elasticity at P=6 %DQ=(2-1.5)/1.75 %DP=(6-7)/6.5 %DQ/%DP=-1.86  Elasticity changes along the demand curve  Unitary elasticity between P=4 and P=5  Above point of unitary elasticity, demand is elastic  Below point of unitary elasticity, demand is inelastic

10. Revenue and Elasticity

11. Total Revenue

12. Elasticity of Supply Ratio of Percentage Change in Quantity Supplied to Percentage Change in Price

13. Ranking Supply Elasticities uRental Housing (short run) uRetail sales clerks uComputer programmers uTiger Woods uCompact Discs