Microeconomics:

Price elasticity of demand & supply

Ilse Aerts
Lecturer at the University College VIVES – Kortrijk
(Belgium)
Do we always worry about the price?
So what we know is …
What we also know is …
 But do you also know this….

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The graphical representation
The graphical representation
Price elasticity of the demand curve

The demand curve (a) is less elastic then the demand curve (b)

Δ Q % < Δ P% Δ Q % > Δ P%
eD < 1 eD > 1
You need an example…
An other example
What determines the price elasticity of the
demand curve?

• The need for a product

• The possibility of finding a substitute for a particular product

• If you find a simular product to the original, the
increase in the price will bring out a major change in
the quantity = high price elasticity

• …
 Do you really understand it?

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What’s the effect of the price elasticity on our
budget?

Budget
What’s the effect of the price elasticity on our
budget?

Budget P X Q
What’s the effect of the price elasticity on our
budget?

Budget P X Q
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What’s the effect of the price elasticity on our
budget?

Budget P X Q
 
What’s the effect of the price elasticity on our
budget?

Budget P X Q
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 Can we stop smoking?

Budget P X Q Budget P X Q
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