tailieunhanh - Lecture Managerial economics (10/e): Chapter 6 - Christopher R. Thomas, S. Charles Maurice

In this chapter, you will learn to: Explain how price elasticity of demand (E) is used to measure the responsiveness or sensitivity of consumers to a change in the price of a good, explain the role that price elasticity plays in determining how a change in the price of a commodity affects the total revenue (TR = P × Q) received, list and explain several factors that affect the elasticity of demand,. | Chapter 6: Elasticity and Demand McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. Elasticity Price Elasticity of Demand (E) P & Q are inversely related by the law of demand so E is always negative The larger the absolute value of E, the more sensitive buyers are to a change in price Measures responsiveness or sensitivity of consumers to changes in the price of a good Sign of Price Elasticity of Demand The coefficient of the price elasticity of demand is always negative It is intuitively more appealing to talk about price elasticity in terms of its absolute value. 6- Elasticity Responsiveness E Elastic Unitary Elastic Inelastic Table Price Elasticity of Demand (E) %∆Q > %∆P %∆Q = %∆P %∆Q 1 E = 1 E Elastic Demand 6- Inelastic Demand 6- Demand becomes less elastic as price declines along a linear demand curve. Percentage change in quantity demanded can be predicted for a given percentage change | Chapter 6: Elasticity and Demand McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. Elasticity Price Elasticity of Demand (E) P & Q are inversely related by the law of demand so E is always negative The larger the absolute value of E, the more sensitive buyers are to a change in price Measures responsiveness or sensitivity of consumers to changes in the price of a good Sign of Price Elasticity of Demand The coefficient of the price elasticity of demand is always negative It is intuitively more appealing to talk about price elasticity in terms of its absolute value. 6- Elasticity Responsiveness E Elastic Unitary Elastic Inelastic Table Price Elasticity of Demand (E) %∆Q > %∆P %∆Q = %∆P %∆Q 1 E = 1 E Elastic Demand 6- Inelastic Demand 6- Demand becomes less elastic as price declines along a linear demand curve. Percentage change in quantity demanded can be predicted for a given percentage change in price as: % Qd = % P x E Percentage change in price required for a given change in quantity demanded can be predicted as: % P = % Qd ÷ E Price Elasticity of Demand (E) Price Elasticity & Total Revenue Elastic Quantity-effect dominates Unitary elastic No dominant effect Inelastic Price-effect dominates Price rises Price falls TR falls TR rises No change in TR No change in TR TR rises TR falls Table %∆Q > %∆P %∆Q = %∆P %∆Q Factors Affecting Price Elasticity of Demand Availability of substitutes The better & more numerous the substitutes for a good, the more elastic is demand Percentage of consumer’s budget The greater the percentage of the consumer’s budget spent on the good, the more elastic is demand Time period of adjustment The longer the time period consumers have to adjust to price changes, the more elastic is demand Factors Affecting Price Elasticity of Demand Necessities versus Luxuries Luxuries have a more elastic demand Definition of the market

• Quản trị kinh doanh
• Managerial economics
• Lecture Managerial economics
• Microeconomic theory
• Economic theory
• Price elasticity of demand
• Demand curve
• Market interactions
• Fundamentals of managerial economics
• Marginal analysis
• Marginal benefit
• Economic principles
• Kinh tế học quản lý
• Price discrimination
• Monopolistic competition
• Oligopoly games
• Traditional oligopoly models
• Capital market
• Labour market
• Economic equations
• Economic applications
• Economic applications of derivatives
• Economic application
• Multi variable functions
• Constrained optimization
• Scatter diagram
• Forms of money
• Monetary policy
• Perfect competition
• Demand function
• Supply function
• Quantitative demand analysis
• Theory of individual behavior
• Demand estimation
• Production function
• Costs of production
• Organizing production