【正文】 2020 Pearson AddisonWesley Calculating the Elasticity of Supply The elasticity of supply is calculated by using the formula: Percentage change in quantity supplied Percentage change in price Elasticity of Supply 169。 2020 Pearson AddisonWesley Cross Elasticity of Demand The cross elasticity of demand is a measure of the responsiveness of demand for a good to a change in the price of a substitute or a plement, other things remaining the same. The formula for calculating the cross elasticity is: Percentage change in quantity demanded Percentage change in price of substitute or plement More Elasticities of Demand 169。 2020 Pearson AddisonWesley At $, demand is unit elastic and total revenue stops increasing. Price Elasticity of Demand 169。 2020 Pearson AddisonWesley For example, if the price falls from $25 to $15, the quantity demanded increases from 0 to 20 pizzas an hour. The average price is $20 and the average quantity is 10 pizzas. The price elasticity of demand is (20/10)/(10/20), which equals 4. Price Elasticity of Demand 169。 2020 Pearson AddisonWesley A UnitsFree Measure Elasticity is a ratio of percentages, so a change the units of measurement of price or quantity leaves the elasticity value the same. Minus Sign and Elasticity The formula yields a negative value, because price and quantity move in opposite directions. But it is the magnitude, or absolute value, that reveals how responsive the quantity change has been to a price change. Price Elasticity of Demand 169。 2020 Pearson AddisonWesley Calculating Price Elasticity of Demand The price elasticity of demand is calculated by using the formula: Percentage change in quantity demanded Percentage change in price Price Elasticity of Demand 169。 2020 Pearson AddisonWesley In Figure (a), an increase in supply brings ? A large fall in price ? A small increase in the quantity demanded Price Elasticity of Demand 169。 2020 Pearson AddisonWesley The percentage change in quantity demanded, %DQ, is calculated as DQ/Qave x 100, which is (2/10) x 100 = 20%. The percentage change in price, %DP, is calculated as DP/Pave x 100, which is ($1/$20) x 100 = 5%. Price Elasticity of Demand 169。 2020 Pearson AddisonWesley If the percentage change in the quantity demanded is infinitely large when the price barely changes, … the price elasticity of demand is infinite and the good has a perfectly elastic demand. Figure (c) illustrates the case of perfectly elastic demand— a horizontal demand curve. Price Elasticity of Demand 169。 2020 Pearson AddisonWesley The total revenue test is a method of estimating the price elasticity of demand by observing the change in total revenue that results from a price change (when all other influences on the quantity sold remain the same)