Quantcast

A community for students. Sign up today!

Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing

Ackbar

  • 2 years ago

What is the difference between elastic and inelastic demand?

  • This Question is Closed
  1. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    Right, a fundamental question ;) Let's first draw Supply and Demand graphs

  2. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    |dw:1330488154668:dw|

  3. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    Price is on the the Y-axis, and Quantity is on the X-axis. This is the basic concept

  4. Ackbar
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    sure, yeah, i get that

  5. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    Elasticity of demand is concerned with how the demand curve changes given changes in price. \[\Delta demand / \Delta price\]

  6. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    |dw:1330488876988:dw| at price P1, Q1 is demanded of the good we're considering

  7. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    |dw:1330488933838:dw| now if P1 increases to P2, the quantity demanded decreases to Q2 here

  8. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    The demand curve hers is pretty much negatively linear (let's say -1 slope), so the elasticity is between that of perfectly elastic and perfectly inelastic.

  9. Ackbar
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    In between?

  10. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    Yes, so|dw:1330489138203:dw|

  11. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    I'll just use this graph as a baseline so i can show you changes more easily

  12. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    |dw:1330489205506:dw| perfectly elastic demand is a horizontal demand curve. When the price changes, the demand essentially drops to 0

  13. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    |dw:1330489375627:dw| P1 increases to P2, but Demand only will "buy" the product at P1 and will only buy Q1 of the product. So the price increased and demand dropped, so that probably means that the consumer found another similar product to purchase

  14. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    |dw:1330489585257:dw| Here you have Inelastic demand, what do you think happens when the price increases?

  15. Ackbar
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    ah, ok, easy to see! an increase in price wouldn't change demand, Q1 would still be demanded

  16. LeoMessi
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 2

    Exactly, seems like this helped ;)

  17. joycechee
    • 2 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    LeoMessi, by a change in the demand, I think you mean a change in the quantity demanded because the curve never shifts. So, are you saying that the slope or the derivative from the previous equilibrium point to the second point is negative? Just a little confused.

  18. Not the answer you are looking for?
    Search for more explanations.

    • Attachments:

Ask your own question

Ask a Question
Find more explanations on OpenStudy

Your question is ready. Sign up for free to start getting answers.

spraguer (Moderator)
5 → View Detailed Profile

is replying to Can someone tell me what button the professor is hitting...

23

  • Teamwork 19 Teammate
  • Problem Solving 19 Hero
  • You have blocked this person.
  • ✔ You're a fan Checking fan status...

Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.

This is the testimonial you wrote.
You haven't written a testimonial for Owlfred.