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5 views26 pageselasticidade preço da procura

Feb 02, 2015

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elasticidade preço da procura

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elasticidade preço da procura

© All Rights Reserved

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Application

Chapter 5

Elasticity . . .

is a measure of how much buyers and

sellers respond to changes in market

conditions

allows us to analyze supply and

demand with greater precision.

Journal Question-Name 3 necessities and

3 luxuries that you would buy.

percentage change in quantity demanded

given a percent change in the price.

demanded of a good responds to a change

in the price of that good.

of Demand

The price elasticity of demand is computed

as the percentage change in the quantity

demanded divided by the percentage

change in price.

Price Elasticity =

Of Demand

Percentage Change in Qd

Percentage Change in Price

and Slope

Because the price elasticity of

demand measures how much

quantity demanded responds to

the price, it is closely related to

the slope of the demand curve.

But instead of looking at unit

change, elasticity looks at

percentage change. What do we

mean by percentage change?

Brief Assessment on

Percentages

picked 16 of them, what percentage of the total

did you pick?

Paul used to weigh 200 lbs last year, but now he

only weighs 175 lbs. How many lbs did he lose?

What is the percent change of the loss?

What is the average of 300 and 330? What is

the midpoint?

of Demand

Price elasticity of demand

Percentage change in price

from $2.00 to $2.20 and the amount you buy falls from

10 to 8 cones then your elasticity of demand would be

calculated as:

(10 8 )

100

20 percent

10

2

( 2.20 2.00 )

100 10 percent

2.00

Demand Using the Midpoint

Formula

The midpoint formula is preferable when

calculating the price elasticity of demand

because it gives the same answer regardless

of the direction of the change.

(Q2 Q1 )/ [(Q2 Q1 )/ 2]

Price Elasticity of Demand=

(P2 P1 )/ [(P2 P1 )/ 2]

of Demand

(Q2 Q1 )/ [(Q2 Q1 )/ 2]

Price Elasticity of Demand=

(P2 P1 )/ [(P2 P1 )/ 2]

Example: If the price of an ice cream cone increases

from $2.00 to $2.20 and the amount you buy falls from

10 to 8 cones the your elasticity of demand, using the

midpoint formula, would be calculated as:

(10 8)

22 percent

(10 8) / 2

2.32

(2.20 2.00)

9.5 percent

(2.00 2.20) / 2

Ranges of Elasticity

Inelastic Demand

percentage change in quantity demand.

Price elasticity of demand is less than one.

Elastic Demand

greater than percentage change in price.

Price elasticity of demand is greater than one.

- Elasticity equals 0

Price

Demand

$5

1. An

increase

in price... 4

Quantity

100

2. ...leaves the quantity demanded unchanged.

Inelastic Demand

- Elasticity is less than 1

Price

1. A 25% $5

increase

in price... 4

Demand

Quantity

90 100

2. ...leads to a 10% decrease in quantity.

- Elasticity equals 1

Price

1. A 25% $5

increase

in price... 4

Demand

Quantity

75

100

2. ...leads to a 25% decrease in quantity.

Elastic Demand

- Elasticity is greater than 1

Price

$5

1. A 25%

increase

in price... 4

Demand

Quantity

50

100

2. ...leads to a 50% decrease in quantity.

- Elasticity equals infinity

Price

1. At any price

above $4, quantity

demanded is zero.

Demand

$4

2. At exactly $4,

consumers will

buy any quantity.

3. At a price below $4,

quantity demanded is infinite.

Quantity

Determinants of

Price Elasticity of Demand

Time Horizon

Determinants of Price

Elasticity of Demand

If the good is a necessity.

If the time period is shorter.

The smaller the number of close substitutes.

The more broadly defined the market.

Determinants of

Price Elasticity of Demand

Demand tends to be more elastic :

if the good is a luxury.

the longer the time period.

the larger the number of close

substitutes.

the more narrowly defined the market.

Total revenue is the amount paid by

buyers and received by sellers of a good.

Computed as the price of the good times

the quantity sold.

TR = P x Q

Price

$4

P x Q = $400

(total revenue)

Demand

100

Quantity

Elasticity

Increase in

Total Revenue

Decrease in

Total Revenue

Increase in

Price

INELASTIC

DEMAND

ELASTIC

DEMAND

Decrease in

Price

ELASTIC

DEMAND

INELASTIC

DEMAND

An Example of an Inelastic

Good

Insert Economics Video

This video will show File 1 and play Arab Oil

the supply side issues clip.

with getting oil out of

the ground.

Then the video will

focus on the demand

(us!) issues of using

oil.

Income elasticity of demand measures

how much the quantity demanded of a

good responds to a change in consumers

income.

It is computed as the percentage change

in the quantity demanded divided by the

percentage change in income.

Income

Elasticity

of Demand

Percentage Change

in Quantity

Demanded

Percentage Change

in Income

Income Elasticity

- Types of Goods

Normal Goods

Income Elasticity is positive.

Inferior Goods

Income Elasticity is negative.

for normal goods but lowers the quantity

demanded for inferior goods.

Demand

Elasticity measure that looks at the

impact a change in the price of one good

has on the demand of another good.

% change in demand Q1/% change in

price of Q2.

Positive-Substitutes

Negative-Complements.

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