[经济学]princ-ch05-presentation.ppt

In this chapter, look for the answers to these questions: What is elasticity? What kinds of issues can elasticity help us understand? What is the price elasticity of demand? How is it related to the demand curve? How is it related to revenue expenditure? What is the price elasticity of supply? How is it related to the supply curve? What are the income and cross-price elasticities of demand? A scenario… You design websites for local businesses. You charge $200 per website, and currently sell 12 websites per month. Your costs are rising (including the opp. cost of your time), so you consider raising the price to $250. The law of demand says that you won’t sell as many websites if you raise your price. How many fewer websites? How much will your revenue fall, or might it increase? Elasticity Basic idea: Elasticity measures how much one variable responds to changes in another variable. One type of elasticity measures how much demand for your websites will fall if you raise your price. Definition: Elasticity is a numerical measure of the responsiveness of Qd or Qs to one of its determinants. Price Elasticity of Demand Price elasticity of demand measures how much Qd responds to a change in P. Price Elasticity of Demand Price elasticity of demand equals Price Elasticity of Demand Along a D curve, P and Q move in opposite directions, which would make price elasticity negative. We will drop the minus sign and report all price elasticities as positive numbers. Calculating Percentage Changes Calculating Percentage Changes Calculating Percentage Changes So, we instead use the midpoint method: Calculating Percentage Changes Using the midpoint method, the % change in P equals A C T I V E L E A R N I N G 1: Calculate an elasticity Use the following information to calculate the price elasticity of demand for hotel rooms: if P = $70, Qd = 5000 if P = $90, Qd = 3000 A C T I V E L E A R N I N G 1: Answers Use midpoint met