calculating elasticity
definition: A mathematical formula used to determine the percentage change in quantity demanded as compared to the percentage change in the price of the product
- equal to 1 or ( = 1 ) is no change
- greater than 1 or ( > 1 ) is a big change
- less than 1 or ( < 1 ) is a small change
connected key terms: elasticity of demand | unitary | elastic | inelastic


everyday examples
▪ The price of PS3 has decreased from $300 dollars when it first came out to currently being $150. Likewise, Sony has decreased its quantity supplied from 4 million units to 2 million units. What is the elasticity of supply, and determine whether the product is elastic, inelastic or unitary?
QD = 4-2/2 = .5 x 100 = 50
P = 300 - 150/150 = .5 x 100 = 50
QD/P or E = 50/50 = 1, unitary

QD = quantity demanded
P = price
QD/P or E = elasticity


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