Application of supply and demand.

1. Ms.MayAndreaS.FranciaBSEd-I
Application of Supply and Demand
Price Elasticity of Demand or Price Elasticity
Measures how much the quantity demanded of good changes when its price changes.
Elastic Demand
When the price elasticity of a good is low.
Its quantity demanded responds little to price changes.
Calculating Elasticity
Price Elasticity of Demand = Ed = Percentage change in quantity Demanded
Percentage change in price
Price Elasticity of Supply = Es = Percentage Change in quantity supplied
Percentage change in price
Income Elasticity = Percentage change in quantity demanded
Percentage change in income
Price Elastic Demand
When a 1% change in price calls for more than 1% change in quantity demanded.
Price – Inelastic Demand
When a 2% change in price calls for more than 1% change in quantity demanded.
Unit – Elastic Demand
Occurs when the percentage change in quantity is exactly as percentage change in price.
1% increases in price yields a 1% decrease in demand.
Total Revenue
Definitive’s equal to price times quantity as (PxQ)
Related Goods
Substitute Goods
Complementary Goods
Substitute Goods
A replacement of the goods whose prices have gone high.
Complementary Goods
Goods that consume together.
Shifts in Supply
Constantly changing the mix of products and services they provide.
Sets of Relative Prices
Market Price
Demand Price

2. Ms.MayAndreaS.FranciaBSEd-I
Market Price
The price seller change for goods whether we buy them or not.
Demand Price
The relative value that individuals subjectively place or having a beat more or less of a
good.
Price Discriminator
The practice of changing different price for the same services to different customers.
The Paradox of the Bumper Harvest
The most famous paradox of all economics.
Price Floor
Lowest price given by the government in a product.
Price Ceiling
Highest price given by the government in a product.
Subsidies
Used to discourage of a commodity.
Used to encourage production.
Types of Elasticity
Elastic
Inelastic
Unitary
Elastic
Depending upon the weather of the percentage.
Inelastic
Smaller than the percentage change in price.
Unitary
Equal to one percentage increase in price.
Farming
The major industry in America hundreds of years ago.
Crop Restriction
Many government attempts to help their farmers by reducing their production.