Loading
Progresso di Studio
Across all your exams
Taught in English
Questo esame si sostiene in inglese: le lezioni e le domande sono in inglese. L'interfaccia resta in italiano.
Drag to pan · ⌘/Ctrl + scroll or pinch to zoom · tap a node for detail · +/− to expand a branch
Part 1 of 1
Elasticity measures how strongly customers react to price changes. The formula is percentage change in quantity divided by percentage change in price.
The sign is usually negative because price and demand move in opposite directions. Focus on the size of the number when deciding whether demand is elastic.
Worked example
A price rises by 10% and demand falls by 30%. Elasticity equals -30%/10%=-3. Demand is elastic because customers strongly reduce purchases.
1.Elasticity compares percentage changes rather than absolute changes.
2.A positive elasticity always means normal demand behavior.
3.An elasticity of -2 indicates elastic demand.
Gain full lifetime access to all 2 lessons in TestAS Subject Modules (Engineering & Economics), interactive MindMaps, step-by-step solved questions, and full timed mock exams for TestAS (Germany).