弹性理论教学教材.pptx

Week 9Chapter 22 Elasticity: A Measure of ResponsivenessLearning ObjectiveList the determinants of the price elasticity of demand;Use price elasticity of demand to predict changes in quantity and total revenue;Explain how the price elasticity of demand varies along a linear demand curve;Define the income elasticity and cross-price elasticity of demand;List the determinants of the price elasticity of supply;Use demand and supply elasticities to predict changes in equilibrium prices.Outline The Price Elasticity of DemandUsing Price Elasticity Elasticity and Total Revenue for a Linear Demand CurveOther Elasticities of DemandThe Price Elasticity of SupplyUsing Elasticities to Predict Changes in PricesElasticity: A Measure of ResponsivenessLaw of Demand;The law of demand is useful, but sometimes we need to know exactly how much less will be demanded at a higher price. In this chapter, we will quantify the law of demand, exploring the responsiveness of consumers to changes in price. Elasticity: A Measure of ResponsivenessThe Law of Supply;we will quantify the law of supply, showing how to predict just how much more of a product will be supplied at a higher price. 1. The Price of Elasticity of DemandPrice Elasticity of Demand (Ed): A measure of the responsiveness of the quantity demanded to changes in price; Ed is equal to the absolute value of the percentage change in quantity demanded divided by the percentage change in price.The Equation: The Price of Elasticity of Demand?The Price of Elasticity of DemandIf the elasticity number is large, it means that the demand for the product is very elastic, or very responsive to changes in price. In contrast, a small number indicates that the demand for a product is very inelastic. Computing Percentage Changes and ElasticitiesWe can compute a percentage change in two ways. Initial Value Method: we divide the change in the value of a variable by its initial value. The Midpoint Method: we divide the change in the variable by its ave