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Economics: Microeconomics- Chapter 4 Elasticity summary
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- Economics
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- University Of The Witwatersrand (wits)
Economics IA, Microeconomics- Chapter 4 Elasticity summary pdf.
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ElasticityChapter 4
Economics 3ed: Global and Southern African Perspectives © 2020 1
,Main ideas
After studying this chapter, you will be able to:
• Define, calculate, and explain the factors that influence the price elasticity
of demand
• Define, calculate, and explain the factors that influence the cross elasticity
of demand and the income elasticity of demand
• Define, calculate, and explain the factors that influence the elasticity of
supply
Economics 3ed: Global and Southern African Perspectives © 2020 2
, Price Elasticity of Demand
• When supply increases, the equilibrium price falls and the equilibrium quantity
increases
• But does the price fall by a large amount and the quantity increase by a little? Or,
does the price barely fall and the quantity increase by a large amount?
• The answer depends on the responsiveness of the quantity demanded to a change
in price (this is the price elasticity of demand)
• Figure 4.1 illustrates the principle
Economics 3ed: Global and Southern African Perspectives © 2020 3
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