Oh ya! then what is the graph for change in demand?
So when decrease in demand falls it left from D to D2 while increase in demands it will shift to right from D to D1.
There's still anything else?
Of course, there's still a lot to catch up!So here it is. Price elasticity of demand (Ed) is a measure of the responsive of quantity demanded to change in price.
I remember this! so there are 3 degree of responsiveness. 1) Change in quantity demanded is larger than change in price (% Δ Q > % Δ P)Demand is elastic/ relatively elastic.2) Change in price is larger than change in quantity demanded(% Δ Q < % Δ P )Demand is inelastic/ relatively inelastic.3) Change in price is same as change in quantity demanded(% Δ Q = % Δ P )Demand is unitary elastic.
Yeap that right!
but how we calculate it?
So we can calculate the degree of elasticity by elasticity coefficient. The formula is
*PS negative sign (-) in the answer is ignored
P2 - P1(P2 + P1) ÷ 2
Q2 - Q1(Q2 + Q1) ÷ 2
How we differentiate the price elasticities with diagram?
OK. so if,- elasticity = 0 (perfect inelastic I vertical)-elasticity < 1(relatively inelastic I steep)-elasticity = 1 (unitary elastic I hyperbola)-elasticity > 1 (relatively elastic I flat)-elasticity = ∞ (perfect elastic I horizontal)
What is the factors that influence of Price Elasticity of Demand (Ed)?
The factors of Price Elasticity of Demand (Ed) are, -Availability of substitutes-Extent of necessity-Relative cost-Durability-Addiction-Time period