TAILIEUCHUNG - Lecture Principles of Microeconomics: Chapter 4 - James D. Miller

Lecture Principles of Microeconomics - Chapter 4: Elasticities. After reading this chapter, you should be able to answer the following questions: What is price elasticity of demand? What are categories of demand elasticity and what factors influence them? What is the relationship between demand elasticity and total revenue? What is income elasticity of demand? What is cross elasticity of demand? What is price elasticity of supply? What are categories of supply elasticity and what factors influence them? | Chapter 4 Elasticities McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved. Learning Objectives What is price elasticity of demand? What are categories of demand elasticity and what factors influence them? What is the relationship between demand elasticity and total revenue? What is income elasticity of demand? What is cross elasticity of demand? What is price elasticity of supply? What are categories of supply elasticity and what factors influence them? 4- Price Elasticity of Demand Price elasticity of demand measures consumers’ responsiveness to price changes. How much quantity demanded will change if price changes. Ignore the negative sign since it’s always there. 4- Categories of Demand Elasticity If price elasticity of demand >1: % change in quantity demanded > % change in price Elastic demand If price elasticity of demand 4- Price Elasticity of Demand Price elasticity of demand measures consumers’ responsiveness to price changes. How much quantity demanded will change if price changes. Ignore the negative sign since it’s always there. 4- Categories of Demand Elasticity If price elasticity of demand >1: % change in quantity demanded > % change in price Elastic demand If price elasticity of demand 4- Elastic Demand Curve A small percentage change in price: A large percentage change in quantity. The price elasticity of demand between Point A and Point B is high. Price elasticity of demand > 1. Point A Point B $8 $7 220 100 Price Quantity Demand 4- Inelastic Demand Curve Point A Point B Quantity 100 110 $10 $4 Price A large percentage change in price: A small percentage change in quantity. The price elasticity of demand between Point A and Point B is low. Price elasticity of demand 4- Perfectly Inelastic Demand Curve Quantity Price Quantity demanded is constant and does not respond to price changes. Price elasticity of demand = 0. This demand curve violates the Law of Demand. Unrealistic demand curve. 4- Perfectly Elastic Demand Curve Quantity Price Quantity demanded is extremely responsive to price changes. The smallest price change causes infinite change in quantity .

• Kinh tế học
• Principles of Microeconomics
• Lecture Principles of Microeconomics
• Price elasticity
• Price elasticity of demand
• Elastic demand curve
• Ten principles of economics
• Scarce resources
• Scarcity implies choice
• Choice implies cost
• Thinking like an economist
• Economic models
• Circular flow diagram
• Production possibilities frontier
• The gains from trade
• Production possibilities
• Comparative advantage
• Absolute advantage
• Market forces
• Supply and demand
• Market economies
• Competitive markets
• Midpoint method
• Demand curves
• Controls on prices
• Price ceiling
• Price floor
• Market outcomes
• Market failures
• Negative externalities
• Positive externalities
• Market inefficiency
• Public goods
• Common resources
• Types of goods
• Cost benefit analysis
• Tax system
• Federal government
• Marginal tax rate
• Budget surplus
• Costs of production
• Total revenue
• Total cost
• Opportunity costs
• Firms in competitive markets
• Average revenue
• Marginal revenue
• Sunk costs
• Monopoly resources
• Government created monopolies
• Natural monopolies
• Monopoly’s revenue
• Monopolistic competition
• Nash equilibrium
• Equilibrium for oligopoly
• Game theory
• Long run equilibrium
• Perfect competition
• Production possibility frontier
• Opportunity cost
• Rational people
• Indirect effects
• Law of demand
• Factors change demand
• Law of supply
• Market demand
• Demand intersect
• Demand determine prices
• Change in demand
• Change in supply
• Policy analysis with supply
• Policy analysis with demand
• Wealth creation
• Production cost
• Total surplus
• International trade
• Additional benefits of trade
• Average costs
• Break even price
• Increasing marginal costs
• Long run analysis
• Firms profit graphically
• Accounting profit
• Market effectiveness
• Monopolist pricing
• Price discrimination
• Antitrust laws
• Disruptive innovation in oligopolies
• Predatory pricing