3弹性及其应用.pdf

Chapter 3 Elasticity and its application Elasticity . . . Elasticity . . . EEllaassttiicciittyy .. .. .. • … allows us to analyze supply and demand with greater precision. • … is a measure of how much buyers and sellers respond to changes in market conditions THE ELASTICITY OF DEMAND • The price elasticity of demand is a measure of how much the quantity demanded of a good responds to a change in the price of that good. • When we talk about elasticity, that responsiveness is always measured in percentage terms. • Specifically, the price elasticity of demand is the percentage change in quantity demanded due to a percentage change in the price. The Price Elasticity of Demand and Its The Price Elasticity of Demand and Its TThhee PPrriiccee EEllaassttiicciittyy ooff DDeemmaanndd aanndd IIttss Determinants Determinants DDeetteerrmmiinnaannttss • Availability of Close Substitutes • Necessities versus Luxuries • Definition of the Market • Time Horizon The Price Elasticity of Demand and Its The Price Elasticity of Demand and Its TThhee PPrriiccee EEllaassttiicciittyy ooff DDeemmaanndd aanndd IIttss Determinants Determinants DDeetteerrmmiinnaannttss • Demand tends to be more elastic: • the larger the number of close substitutes. • if the good is a luxury. • the more narrowly defined the market. • the longer the time period. Computing the Price Elasticity of Demand Computing the Price Elasticity of Demand CCoommppuuttiinngg tthhee PPrriiccee EEllaassttiicciittyy ooff DDeemmaanndd • The price elasticity of demand is computed as the percentage change in the quantity demanded divided by the percentage change in price. Percentage change in quantity demanded Price elasticity of demand = Percentage change in price Computing t