Price elasticity of demand and supply, Microeconomics

 

Price Elasticity of Demand is explained below:

Price elasticity of demand/require is the percentage change in the quantity demanded with respect to the percentage change in the cost.

Price elasticity of demand can be illustrated by the below written formula:

 

P?d = Percentage change in Quantity Demanded

Percentage change in Price

 

Where ? = Epsilon; universal notation for elasticity.

If, for instance, a 20% rise in the price of a product causes a 10% fall in the Quantity demanded, the price elasticity of demand becomes:

 

P?d = - 10% = - 0.5

20%

 

Price Elasticity of Supply is defined below:

Price elasticity of supply is the percentage change in quantity supplied with respect to the percentage change in the cost of commodity.

Price elasticity of supply can be defined by the below written formula:

 

P?s = Percentage change in Quantity Supplied

Percentage change in Price

 

 

If a 15% increase in the price of a commodity causes a 15% rise in the quantity supplied, the price elasticity of supply will become:

 

P?s = 15 % = 1

    15 %

 

Posted Date: 7/19/2012 3:57:05 AM | Location : United States







Related Discussions:- Price elasticity of demand and supply, Assignment Help, Ask Question on Price elasticity of demand and supply, Get Answer, Expert's Help, Price elasticity of demand and supply Discussions

Write discussion on Price elasticity of demand and supply
Your posts are moderated
Related Questions

why sellers and producers keep pricess lower

You are the CEO of Comchip, a firm that sells specialized computers. Each of the firm's computers contain a unique chip that is produced at Comchip's west coast plant at a cost of

Q. Show the method of applying a discount? The method of applying a discount rate to convert future monetary amounts to their equivalent value in today's terms, based on the pr

LINKAGES OF BUREAUCRACY WITH THE KNOWLEDGE CENTRES: The Government employees must make use of knowledge generated in higher seats of learning for implementing economic policie

what is the influence of an increase of migrants on the market supply labour

Measured cell emf are the basis for standard electrode potentials. chemistry assignments A method for the presentation of the data obtained from measurements of the equilibrium

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

data of past 20 years regarding price, wage, employment, productivity, investment, profit or loss.

1.  Clorox lowers the price of its GreenWorks TM bathroom cleaner.  All other things remaining the same, choose how you think this will impact the market price of Pine-Sol. (Circl