# The elasticity of demand, Variety of Demand, Elastic Supply Curve, Supply Curve, Elastic Demand, Demand, Supply

Elasticity,

Elasticity of demand

Variety of Demand Curve,
Supply Curve,
Elastic Supply,
Elastic Demand,
Demand,
Supply

Microeconomics Lecture 4

Elasticity talk about how much buyers and sellers respond to changes in market conditions.

THE ELASTICITY OF DEMAND Price is a measure of how goods are responded to according to demand and supply based on price change. Variety – of – Demand – Curve Inelastic Demand – Quantity does not respond if the price is changing. Price elasticity is are the response of less than one.

Price-Elasticity of demand
Inelastic Demand: Elasticity if it is less than 1 0 Quantity \$5 90 1. A 25% Demand is increasing in price. Price 2 leads to a decrease in supply.

Elastic Demand Curve Elastic Demand –

Quantity demand responds strongly if any changes in the price of products also hamper in market.
Price-Elastic- Demand in Elastic Demand: Elasticity will greater than 1. Demand Quantity When the price is less then the demand quantity will be more… If the decrease in price leads to a 50 percent will decrease in quantity.

Perfectly Inelastic Demand Curve
Perfectly Inelastic – Here quantity is not respond to changes in price. The price – Elasticity of demand Southwestern/Thomson Learning Perfectly Inelastic Demand: Elasticity Equals 0 \$5 4 Quantity Demand 0 100 5.

Price

Perfectly-Elastic-Demand Curve

Perfectly Elastic – Quantity demanded changes infinitely with any change in price Perfectly Elastic Demand _- Elasticity will Infinity 0 Quantity Price \$4 Demand

Unit of Elastic Demand Microeconomics Lecture 5 The variety of demand curve

The price of elastic demand will measure how much the quantity demand will respond according to price. It closely interacts with the demand curve. Total Revenue Total revenue is the amount paid by buyers and received by sellers of goods and services.
TR = P x Q Figure 2 Total Revenue Copyright©2003 Southwestern/Thomson Learning Demand Quantity Q P 0 Price P × Q = \$400 (Revenue) \$4 100 Figure 3 How Total Revenue Changes When Price Changes: Inelastic Demand Copyright©2003 Southwestern/Thomson Learning Demand 0 Quantity Price Revenue = \$100 0 Quantity Price Revenue = \$240 Demand \$1 100 \$380 In increase in price from \$1 to \$3 leads to increases to total revenue \$100 to \$240.

Inelastic Demand curve Demand to increase In the price that will hamper quantity and market prices of products that is proportionately smaller. Thus, total revenue increases.

How total revenue Changes When Price Changes: Elastic Demand Southwestern/Thomson Learning Demand 0 Quantity Price Revenue = \$200 \$450 Demand 0 Quantity Price Revenue = \$100 \$5 20 To increase in price from \$4 to \$5 will lead to a decrease of total revenue like \$200 to \$100 Elastic also total revenue will along linear demand curve.

Demand curve increase will hamper if any changes happen then it will destroy price controlled supply too that is proportionately larger. Thus, total revenue decreases. Income of- Elasticity of Demand Income elastic demand measure quantity demand that good response if a change in consumer income. THE ELASTICITY OF SUPPLY Supply is a measure of how much quantity supply of a good responds if changes in the price of that good.

Price- Elasticity Supply

change in quantity resulting from a percent change in price.

Price- Elasticity of supply Southwestern/Thomson Learning Inelastic Supply: Elasticity will be less than 1 like 110 \$5 100 4 0 Quantity 1. A 25% will increase in price

Price 2 leads to a 10 Percent Increase in quantity supplied.

Price- Elasticity of supply – Southwestern/Thomson Learning Elastic Supply: Elasticity will greater than 1 Quantity 0 Price 3. A 25%as increase in price leads to a 100% increase in the quantity supplied.

Price – Elasticity of supply Southwestern/Thomson Learning Perfectly Inelastic Supply: Elasticity Supply 0 100 Quantity 5.

If the increase in price leaves then the quantity supply will not change.

Southwestern/Thomson Learning (d) Perfectly Elastic Supply: Elasticity Equals Infinity 0 Quantity Price \$4 Supply 7. At price well below \$ quantity supply zero. At exactly \$4, producers will supply any quantity. For any price above \$4, the quantity supply is infinite. Price- Elasticity of supply Southwestern/Thomson Learning Unit Elastic Supply: Elasticity Equals price elasticity demand measures how much quantity demand responds according to price.

If a demand curve is elastic total revenue falls when the price rises. If it is inelastic, total revenue rises as the price rises.

Summary

Income – Elasticity Deman – will measure how much quantity demand responds to changes in consumers’ income. The cross-price Elastic demand will measure when the quantity demand of one good responds to the price of another good. Price- Elastic Supply It measures how much and quantity supply responds to a change in price In most of the markets, supply will be more elastic in long run than short-run Price- Elasticity of supply Calculated as percentages change in the quantity that is divided into the percentage to change in price L The tools of supply and demand can be applied in many different types of markets. But it depends on the category of the market and how they change and explore the economy.