Elasticity is a measure of the responsiveness of quantity demanded to a change in the price level of the product Jake Allen Youth Jersey , a product may be perfectly elastic, perfect inelastic and unitary, when a good’s elasticity is perfectly inelastic then a change in the price of the product will not change the amount demanded, a perfect elastic product is that which its demand will change by a large magnitude than the change in price.
The formula for calculating elasticity is as follow
E = (change in demand change in price) multiplied by the (price demand)
E = (D2 – D1 P2 – P1) X (P1 D1)
Where
D1 is the demand before price increase
D2 is the demand for the product after price increase
P1 price before increase
P2 price after increase
E is elasticity
For our question where the price of apples rises from $3 a pound to $3.50 and the consumption of apples drops from 35 pounds of apples a month to 20 pounds of apples Brayden Schenn Youth Jersey , we will analyze this graphically as follows: When the price increases from P1 to P2 then the demand will decline as shown in the above diagram and this is from D1 to D2.
In our case the price elasticity of demand will be given by the formula:
Thema drucken
03.01.2019 07:30
Antworten
