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【正文】 mand: Elasticity Equals 0 € 5 4 Quantity Demand 100 0 1. An increase in price . . . 2. . . . leaves the quantity demanded unchanged. Price Copyright169。2022 SouthWestern Figure 1 The Price Elasticity of Demand 2. . . . leads to a 22% decrease in quantity demanded. (c) Unit Elastic Demand: Elasticity Equals 1 Quantity 4 100 0 Price € 5 80 1. A 22% increase in price . . . Demand Copyright169。2022 SouthWestern Figure 1 The Price Elasticity of Demand (e) Perfectly Price Elastic Demand: Elasticity Equals Infinity Quantity 0 Price € 4 Demand 2. At exactly €4, consumers will buy any quantity. 1. At any price above €4, quantity demanded is zero. 3. At a price below €4, quantity demanded is infinite. Copyright169。2022 SouthWestern Price Elasticity and Total Revenue along a Linear Demand Curve ? With a price inelastic demand curve, an increase in price leads to a decrease in quantity that is proportionately smaller. Thus, total revenue increases. Figure 3 How Total Revenue Changes When Price Changes: Price Inelastic Demand Demand Quantity 0 Price Revenue = €100 Quantity 0 Price Revenue = €240 Demand €1 100 €3 80 An Increase in price from €1 to €3 … … leads to an Increase in total revenue from €100 to €240 Copyright169。2022 SouthWestern Price Elasticity of a Linear Demand Curve Ine Elasticity of Demand ? Ine elasticity of demand measures how much the quantity demanded of a good responds to a change in consumers’ ine. ? It is puted as the percentage change in the quantity demanded divided by the percentage change in ine. Computing Ine Elasticity of Demand I n c o m e e l a s t i c i t y o f d e m a n d =P e r c e n t a g e c h a n g e i n q u a n t i t y d e m a n d e dP e r c e n t a g e c h a n g e i n i n c o m eIne Elasticity of Demand ? Types of Goods – Normal Goods – Inferior Goods ? Higher ine raises the quantity demanded for normal goods but lowers the quantity demanded for inferior goods. Ine Elasticity of Demand ? Demand for goods consumers regard as necessities tends to be ine inelastic – Examples include food, fuel, clothing, utilities, and medical services. ? Demand for goods consumers regard as luxuries tends to be ine elastic. – Examples include sports cars, furs, and expensive foods. THE PRICE ELASTICITY OF SU
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