So, for the title to be complete, we have to talk about the price elasticity of demand. The phrase “elasticity of demand” is incomplete: we are talking about the response of demand to something. Let us talk first about the elasticity of demand. Both the demand and supply curves have elasticities. In economics, when we think about " elasticity," we are interested in how much a quantity demanded or supplied will change when some “force” is applied to the market. In physics, the term “elasticity” refers to how much something stretches when force is applied to it. We will look at the supply curve in the next lesson. We now ask, how much do they change?Īt this point, this question relates to the shapes and slopes of the demand curves, which we will examine here. Things change: this is the nature of a dynamic economy. Given the millions of human interactions that make up an economy, it is not surprising that things do not stay the same for very long, if at all. Please read Chapter 7 in the text (Consumer Choice and Elasticity) to accompany the material in this section.Įconomics is a dynamic process.
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