New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here


by: Jordan Derby

Elasticity 12200

Jordan Derby
GPA 3.595

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Elasticity: Supply and Demand
Principles of Economics: Microeconomics
Elizabeth Kaletski
Class Notes
Microeconomics Notes
25 ?




Popular in Principles of Economics: Microeconomics

Popular in Economcs

This 2 page Class Notes was uploaded by Jordan Derby on Wednesday March 2, 2016. The Class Notes belongs to 12200 at Ithaca College taught by Elizabeth Kaletski in Spring 2016. Since its upload, it has received 20 views. For similar materials see Principles of Economics: Microeconomics in Economcs at Ithaca College.

Similar to 12200 at IC

Popular in Economcs


Reviews for Elasticity


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 03/02/16
Elasticity: Supply and Demand Elasticity- a numerical measure of the responsive Qd or Qs to one of its determinants • Measures how much one variable responds to changes to another variable • One type of elasticity measures how much demand for your websites will fall if you raise your price Price of Elasticity in Demand- measures how much Qd responds to a change in P • Price of Elasticity in Demand = Percentage change in Qd/Percentage change in P • Anything above 1.0 = Really Responsive Calculating Percentage Changes: Midpoint Method- Percentage of Change in P = new price – initial price ((new price + initial price)/2) X 100 Lessons: Price elasticity is higher when close substitutes are available • You respond (responsive) more when there are more substitutes Price elasticity is higher for narrowly defined goods than for broadly defined ones Price elasticity is higher for luxuries than for necessities Price elasticity is higher in the long run than in the short run Price elasticity is higher for goods that are a larger portion if income spent The Variety of Demand Curves • The  price  of  elasticity  of  demand  is  closely  related  to  the  slope  of  the  demand   curve   • Rule  of  Thumb:   o The  Flatter  the  Curve  =  The  Bigger  the  Elasticity   o The  Curvier  the  Curve  =  The  Smaller  the  Elasticity   • “Perfectly  inelastic  demand”  customers  don’t  respond  (Qd  is  0)   o Does  not  truly  exist   • “Inelastic  Demand”  =  >1     • “Unit  Elastic”  =  1   • “Elastic”  =  <1   • “Perfectly  Elastic”  =  Infinity  (P  is  0)       Price  Elasticity  and  Total  Revenue   • Revenue=  P  x  Q   • As  Price  increases:   o Higher  P  means  more  revenue  on  each  unit  you  sell   o But  you  sell  fewer  units  (lower  Q),  due  to  Law  of  Demand     Price  Elasticity  of  Supply  –  measures  how  much  Qs  responds  to  a  change  in  P   • Measures  sellers’  price-­‐sensitivity       Income  Elasticity  of  Demand  –  measures  the  response  of  Qd  to  a  change  in   consumer  income   • IED  =  %  Change  in  Qd  /  %  Change  in  Income     Cross-­‐price  Elasticity  of  Demand  –  measures  the  response  of  demand  for  one  good   to  changes  in  the  price  of  another  good   • C-­‐PED  =  %  Change  in  Qd  for  Good  1  /  %  Change  in  P  for  Good  2   • For  substitutes,  cross-­‐price  elasticity  >  0   • For  complements,  cross-­‐price  elasticity  <  0    


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

Kyle Maynard Purdue

"When you're taking detailed notes and trying to help everyone else out in the class, it really helps you learn and understand the I made $280 on my first study guide!"

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.