The Economics of

Demand

 The Demand Curve

 Elasticity of Demand
 Changes in Demand

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 Objectives
Elasticity of Demand
 Compute the elasticity of demand and
explain its relevance.
 Discuss factors that influence
elasticity of demand.

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 Elasticity of Demand
 Elasticity of demand The elasticity of demand
refers to the degree to which demand responds
to a change in an economic factor. Price is the
most common economic factor used when
determining elasticity. Other factors include
income level and substitute availability.
Elasticity measures how demand shifts when
economic factors change. When demand
remains constant regardless of price changes,
it is called inelasticity.

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 Elasticity of Demand
 Elasticity of demand The elasticity of demand
refers to the degree to which demand responds
to a change in an economic factor. Price is
the most common economic factor used when
determining elasticity. Other factors include
income level and substitute
availability.Elasticity measures how demand
shifts when economic factors change. When
demand remains constant regardless of price
changes, it is called inelasticity.

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 Types
Elasticity of Demand

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 Types
Elasticity of Demand

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 Types
Elasticity of Demand

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 Types
Elasticity of Demand

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 Types
Elasticity of Demand

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 Computing the
Elasticity of Demand
 Elasticity of demand measures the
percentage change in quantity demanded
divided by percentage change in price.

Percentage change in
Elasticity quantity demanded
of
=
Percentage
demand change in price
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 Computing the
Elasticity of Demand
Change
Percentage Demand
Absolute
Value

Percentage Presyo
Change

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 Computing the
Elasticity of Demand

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 Computing the
Elasticity of Demand

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 Example:

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 Solution:

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 Example:

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 Solution:

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 Know your demand!!!
P QD
A 2 70
B 5 55
C 7 45
D 9 35
E 14 10
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