![]() The arc elasticity method gives us an estimate of elasticity. The price elasticity of demand for a good or service, e D, is the percentage change in quantity demanded of a particular good or service divided by the percentage change in the price of that good or service, all other things unchanged. ![]() To show how responsive quantity demanded is to a change in price, we apply the concept of elasticity. But how much will it change? It seems reasonable to expect, for example, that a 10% change in the price charged for a visit to the doctor would yield a different percentage change in quantity demanded than a 10% change in the price of a Ford Mustang. We know from the law of demand how the quantity demanded will respond to a price change: it will change in the opposite direction.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |