elasticity

When is supply price elastic?

It is normal if an increase in income causes an increase in demand

Perfectly elastic

YED>1

Unitary elasticity

Quantity supplied < Quantity Demanded

curves are vertical, which reflects the quantity supplied is insensitive to price changes

Quantity demanded changes by the same percentage as the price.

Quantity demanded responds strongly to changes in price.

Can replace the object/item Ex. DVD vs. VCR, Coke vs. Pepsi-Go the opposite way

Perfectly inelastic

Quantity demanded does not respond to price changes.

PED is the responsiveness in the demand for a good due to a change in its price

Free Good - Good that is not scarce

the goods is price elastic, change in the P of the goods will lead to larger than change in QS

a measure of the degree of responsiveness of the q demanded to a change in Y, ceteris paribus

Price elastic

%change in quantity demanded divided %change in income

Price inelastic

image show elasticity of ...