Open main menu
Home
Random
Recent changes
Special pages
Community portal
Preferences
About Wikipedia
Disclaimers
Incubator escapee wiki
Search
User menu
Talk
Dark mode
Contributions
Create account
Log in
Editing
Demand curve
(section)
Warning:
You are not logged in. Your IP address will be publicly visible if you make any edits. If you
log in
or
create an account
, your edits will be attributed to your username, along with other benefits.
Anti-spam check. Do
not
fill this in!
==Elasticity of demand for a good with respect to its own price== {{Main|Price elasticity of demand}} The price elasticity of demand is a measure of the sensitivity of the quantity variable, Q, to changes in the price variable, P. The elasticity of demand for a good with respect to its own price is the percentage of change in quantity divided by the percentage of change in price. For example an elasticity equals to -2 (The elasticity is negative because the price rises, and the quantity demanded falls, a consequence of the [[law of demand]]) means that if the price increases by 4% the quantity decreases by 2%. This is thus important in determining how revenue will change. Formally, the elasticity of demand for good X with respect to its price is calculated as following: <math>E_x,p_x = \frac{\Delta x} {x} / \frac{\Delta p_x} {p_x} = \frac{\Delta x} {\Delta p_x} \frac{p_x} {x}</math>. If we have a specific differential function we can use derivatives: <math>E_x,p_x = \frac{dx} {dp_x} \frac{p_x} {x}</math>. The elasticity of demand indicates how sensitive the demand for a good is to a price change. If the elasticity's [[absolute value]] is between zero and 1, demand is said to be inelastic; if it equals 1, demand is "unitary elastic"; if it is greater than 1, demand is elastic. If it is smaller than 1, wh have inelastic demand, which implies that changes in price have little influence on demand. High elasticity indicates that consumers will respond to a price rise by buying much less of the good. For examples of elasticities of particular goods, see the article section, [[ Price_elasticity_of_demand#Selected_price_elasticities|"Selected price elasticities"]]. The elasticity of demand usually will vary depending on the price. If the demand curve is linear, demand is inelastic at high prices and elastic at low prices, with unitary elasticity somewhere in between. There does exist a family of demand curves with constant elasticity for all prices. They have the demand equation '''<math>Q=aP^{c}</math>''', where ''c'' is the elasticity of demand and ''a'' is a parameter for the size of the market. These demand curves are smoothly curving with steep slopes for high values of price and gentle slopes for low values.
Edit summary
(Briefly describe your changes)
By publishing changes, you agree to the
Terms of Use
, and you irrevocably agree to release your contribution under the
CC BY-SA 4.0 License
and the
GFDL
. You agree that a hyperlink or URL is sufficient attribution under the Creative Commons license.
Cancel
Editing help
(opens in new window)