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
effect of tariffs on national income and employment


Provide an economic explanation of what you have shown in your diagrams above. Discuss what happens to Iceland's (1) level of economic output, (2) employment, (3) real wage rate,

Consider the following duopoly with differentiated goods where x 1   and  x 2   denote the amounts of the goods 1 and 2  respectively, with prices p 1   and  p 2 . The demand funct

REAL BUSINESS CYCLE THEORY: The parable that motivates this discussion originated with Edmund Phelps and invites you to think that all men (and women) are islands. They have p

Explain three major barriers to development experienced by developing countries. Well, the scope of possible answers here is, em, wide, to say the least. The issue is not to si

Elasticity is a term broadly used in economics to signify the “responsiveness of one variable to changes in to another.” Types of Elasticity can be explained as follows: Th

I need help on MCQs on international trade and imperfect competetion

#1 explain with the aid of diagram the effect of an increase in demand for palm oil on the equilibrum position for palm kernel

Marginal utility   - It is the measure of the additional satisfaction obtained from consuming one additional unit of good. * Marginal Utility: An instance - The marginal u