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5 Cards in this Set
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- Back
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Market Demand Curve; Def →
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A curve realting the quantity of a good all consumers in a market will buy to its price
The market demand is equal tothe sum of individual demands. More precisley: a, b, c, d see notes, Lecture 8, page 1 |
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Price elasticity of demand and the appearance of the market demand curve, Def →
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See notes for the math
Price elasticities are negative. |
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Inelastic; 0<|nd|<1
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- Quantity demanded changes by less than 1%
- Expenditures =P*Q will increase when price increases - Usually goods with few close substitutes, e.g,insulin, heart surgury |
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Unit Elastic; |nd|=>1
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Quantity demanded changes by 1%
- Expendiitures will be unchanged when price increases |
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Elastic; |nd|>1
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Quantity demanded changes by more than 1%
- Expenditures= P*Q will decrease when price increases - Ususally, goods with many close substitutes, eg, Exxon gas |
