Elasticity of demand- measure of how consumers react in change of price
Elastic Demand- demand that is very sensitive to a change in price
-product is not a necessity
- has available subs
Inelastic Demand- demand that is not very sensitive to a change in
price
- product is a necessity
- few or no subsitutes
- people will buy no matter what
Unitary Demand- (E = I)
Price elasticity of demand - PED
How to find out PED
1. Quanity (New Q - Old Q / Old Q
2. Price (New P - Old P / Old P
3. % ▲in quantity demanded / %▲ in price = PED
Total Revenue- total amount of money on a form resources from selling goods and services
- Price X quantity = total revenue
Fixed Cost- a cost that does not change or alter no matter how much is produced (rent, mortgage,)
Marginal Cost- Producing one or more of a good)
Don't forget to add that for elastic demand E>1 and for inelastic demand E<1.
ReplyDeleteSome examples of elastic demand are soda, fur coat, steak, and candy.
Some examples of inelastic demand are gas, insulin/medicine, milk, salt, and toothpaste.