1. When elasticty is greater than 1
    demand is elastic
  2. You got a elasticty of 1.5. what does this mean?
    A coefficient of 1.5 for price elasticity of demand means that for every 1 pecent chnage in price,  there will be a corresponding 1.5 percent change in quantity demanded in the opposite direction of the price change. Demand is elastic.
  3. price elasticity of demand formula
    • Q2 - Q1            P2 + P1    
    • —————   X   —————
    • Q2 + Q1            P2 - P1
  4. Inelastic demand
    elasticity less than 1
  5. If elasticity is exactly 1
    it is called unit elastic
  6. Perfect elasticity
    Perfrectly horizontal line on graph
  7. perfect inelasticity
    perfect vertical line on graph
  8. The more flat a demand curve is
    the more elastic it is
  9. on a demad curve....
    very elastic at the top and progressively less elastic down the curve
  10. something that is elastic
    • - has a lot of substitutes
    • - when price changes a little and quantity demanded changes a lot
  11. something that is inelastic
    • - has fewer substitutes
    • - lots of price change and little change in quantity demanded
Card Set
econ 2