[经济学]经济学原理英文版第五章PPT.pdfVIP

5 Elasticity and its Application P R I N C I P L E S O F M I CR OE CON OMI C S F O U R T H E D I T I O N N. G R E G O R Y M A N K I W PowerPoint® Slides by Ron Cronovich © 2007 Thomson South- Western, all rights reserved 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’re thinking of 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? CHAPTER 5 ELASTICITY AND ITS APPLICATION 1 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. CHAPTER 5 ELASTICITY AND ITS APPLICATION 2 Price Elasticity of Demand Price elasticity Percentage change in Qd = of demand Percentage change in P Price elasticity of demand measures how much Qd responds to a change in P. Loosely speaking, it measures the price- sensitivity of buyers’ demand. CHAPTER 5 ELASTICITY AND ITS APPLICATION 3 Price Elasticity of Demand Price el