Elasticity is a measure of how responsive one variable is to changes in another variable. The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. It is calculated as the percentage change in quantity divided by the percentage change in price. Demand can be inelastic (PED < 1), unit-elastic (PED = 1), or elastic (PED > 1) depending on the magnitude of the price elasticity. The slope of the demand curve and the value of the price elasticity are closely related, with a more elastic demand represented by a flatter curve.
Elasticities of Demand and Supply and ApplicationKarl Obispo
Elasticities of Demand and Supply and Application
[1] Elasticity refers to the responsiveness of quantity demanded or supplied to changes in factors like price and income. There are different types of elasticity including own price elasticity and cross price elasticity.
[2] Elasticities are measured using the percentage change formula and can be point or arc elasticities. Own price elasticity measures the responsiveness of quantity to price changes. Inelastic demands are less responsive than elastic demands.
[3] Elasticities help determine how taxes impact consumers versus producers. Demands more elastic than supply means producers bear more of the tax burden.
Elasticity measures the responsiveness of one variable to changes in another variable. There are four main types of elasticity: price elasticity of demand, income elasticity of demand, cross elasticity of demand, and price elasticity of supply. Price elasticity of demand indicates how much quantity demanded responds to a percentage change in price. Demand can be perfectly inelastic, inelastic, unitarily elastic, elastic, or perfectly elastic depending on its price elasticity coefficient. Price elasticity of supply works similarly but for quantity supplied in response to price changes.
Here are the definitions for the terms in the question:
1. Inferior goods - Goods for which demand decreases when income increases, as consumers switch to higher quality substitutes when they become richer.
2. Giffen goods - Rare goods that people demand more of as the price rises because it is considered a necessity, and it becomes a higher priority when money is tight.
3. Consumer surplus - The difference between the maximum price a consumer would be willing to pay for a good or service and the actual price paid. It measures the benefit consumers receive from purchases.
4. Perfectly elastic demand - Demand curve is horizontal, meaning any change in price results in an infinite change in quantity demanded between zero and
This document provides an overview of price controls and elasticity. It discusses how governments may implement price ceilings and price floors to control prices. Price ceilings that are set below the market equilibrium price can result in shortages, while price floors above the equilibrium can cause surpluses. The document also explains price elasticity of demand and the factors that influence it, such as availability of substitutes and whether a good is a necessity. Price elasticity analysis can help firms understand how changes in price may impact total revenue.
Price Elasticity of Demand, Degrees of Elasticity, Factors determining Elasticity of Demand, Measurement of Price Elasticity, Importance of Elasticity of Demand
Unit - 2 Elasticity of demand (New Syllabus).pptSelf Employed
This document provides an overview of elasticity of demand. It begins by defining elasticity and the law of demand. It then discusses different types of demand and the determinants of demand. The document explains exceptions to the law of demand, including Giffen goods and Veblen goods. It defines price elasticity of demand, income elasticity of demand, cross elasticity of demand, and advertisement elasticity of demand. The document also covers methods of measuring elasticity and the significance and factors affecting elasticity of demand. Finally, it briefly discusses demand forecasting and the law of supply.
1. A new, more productive variety of paddy increases supply, shifting the supply curve to the right.
2. With inelastic demand, this leads to a large fall in price and a proportionately smaller increase in quantity sold.
3. As a result, total revenue for farmers falls despite the increased supply.
Demand for drugs is relatively inelastic due to lack of substitutes and addictive nature. If supply of drugs decreases through tougher enforcement, the quantity consumed only slightly decreases. However, the new equilibrium occurs at a higher price point on the inelastic demand curve. This means total drug revenues actually increase despite the smaller quantity. Increasing drug prices and revenues could paradoxically make drug dealing a more lucrative business. Decreasing drug demand through education programs targeting substitutes may be a more effective strategy to meaningfully reduce both consumption and revenues from the drug trade.
Elasticities of Demand and Supply and ApplicationKarl Obispo
Elasticities of Demand and Supply and Application
[1] Elasticity refers to the responsiveness of quantity demanded or supplied to changes in factors like price and income. There are different types of elasticity including own price elasticity and cross price elasticity.
[2] Elasticities are measured using the percentage change formula and can be point or arc elasticities. Own price elasticity measures the responsiveness of quantity to price changes. Inelastic demands are less responsive than elastic demands.
[3] Elasticities help determine how taxes impact consumers versus producers. Demands more elastic than supply means producers bear more of the tax burden.
Elasticity measures the responsiveness of one variable to changes in another variable. There are four main types of elasticity: price elasticity of demand, income elasticity of demand, cross elasticity of demand, and price elasticity of supply. Price elasticity of demand indicates how much quantity demanded responds to a percentage change in price. Demand can be perfectly inelastic, inelastic, unitarily elastic, elastic, or perfectly elastic depending on its price elasticity coefficient. Price elasticity of supply works similarly but for quantity supplied in response to price changes.
Here are the definitions for the terms in the question:
1. Inferior goods - Goods for which demand decreases when income increases, as consumers switch to higher quality substitutes when they become richer.
2. Giffen goods - Rare goods that people demand more of as the price rises because it is considered a necessity, and it becomes a higher priority when money is tight.
3. Consumer surplus - The difference between the maximum price a consumer would be willing to pay for a good or service and the actual price paid. It measures the benefit consumers receive from purchases.
4. Perfectly elastic demand - Demand curve is horizontal, meaning any change in price results in an infinite change in quantity demanded between zero and
This document provides an overview of price controls and elasticity. It discusses how governments may implement price ceilings and price floors to control prices. Price ceilings that are set below the market equilibrium price can result in shortages, while price floors above the equilibrium can cause surpluses. The document also explains price elasticity of demand and the factors that influence it, such as availability of substitutes and whether a good is a necessity. Price elasticity analysis can help firms understand how changes in price may impact total revenue.
Price Elasticity of Demand, Degrees of Elasticity, Factors determining Elasticity of Demand, Measurement of Price Elasticity, Importance of Elasticity of Demand
Unit - 2 Elasticity of demand (New Syllabus).pptSelf Employed
This document provides an overview of elasticity of demand. It begins by defining elasticity and the law of demand. It then discusses different types of demand and the determinants of demand. The document explains exceptions to the law of demand, including Giffen goods and Veblen goods. It defines price elasticity of demand, income elasticity of demand, cross elasticity of demand, and advertisement elasticity of demand. The document also covers methods of measuring elasticity and the significance and factors affecting elasticity of demand. Finally, it briefly discusses demand forecasting and the law of supply.
1. A new, more productive variety of paddy increases supply, shifting the supply curve to the right.
2. With inelastic demand, this leads to a large fall in price and a proportionately smaller increase in quantity sold.
3. As a result, total revenue for farmers falls despite the increased supply.
Demand for drugs is relatively inelastic due to lack of substitutes and addictive nature. If supply of drugs decreases through tougher enforcement, the quantity consumed only slightly decreases. However, the new equilibrium occurs at a higher price point on the inelastic demand curve. This means total drug revenues actually increase despite the smaller quantity. Increasing drug prices and revenues could paradoxically make drug dealing a more lucrative business. Decreasing drug demand through education programs targeting substitutes may be a more effective strategy to meaningfully reduce both consumption and revenues from the drug trade.
Here are some ways the concept of price elasticity can be used in business decisions:
1. Maruti Udyog - If cross price elasticity of demand between Zen and Alto is high (i.e. they are close substitutes), then a price decrease for one model can help boost its sales by diverting demand from the other. This information helps in pricing strategies.
2. HP - Since laptops and printers are complements, a price decrease in one will lead to an increase in demand for both by virtue of complementarity. So bundle pricing or discounts on both can boost revenues.
3. Diamond factory - Since supply of skilled labor is fixed in short run, elasticity of supply of labor is low
This document provides an overview of elasticity concepts including:
1) Price elasticity of demand which measures the responsiveness of demand to price changes and includes perfectly elastic, relatively elastic, unitary, relatively inelastic, and perfectly inelastic demand.
2) Factors that affect price elasticity like the nature of the good, availability of substitutes, and proportion of income spent.
3) Practical importance of price elasticity for business decisions, tax policy, and international trade.
4) Income elasticity of demand which measures the responsiveness of demand to income changes and can be positive, negative, or zero. Measurement and factors like price are also discussed.
5) Elasticity of
This document provides an overview of elasticity concepts including:
1) Definitions of price elasticity of demand and its measurement. Price elasticity measures the responsiveness of demand to price changes.
2) The five types of price elasticity are defined with examples - perfectly elastic, relatively elastic, unitary, relatively inelastic, and perfectly inelastic.
3) Other elasticity concepts are introduced including income elasticity, cross elasticity, substitution elasticity and advertising elasticity. Measurement techniques and factors that influence each type of elasticity are also discussed.
4) The practical importance of elasticity concepts for business decisions, tax policy, and economic analysis are outlined. Elasticity helps explain market behaviors and
This document provides an overview of elasticity concepts including:
1) Definitions of price elasticity of demand and its measurement. Price elasticity measures the responsiveness of demand to price changes.
2) The five types of price elasticity are defined with examples - perfectly elastic, relatively elastic, unitary, relatively inelastic, and perfectly inelastic.
3) Other elasticity concepts are introduced including income elasticity, cross elasticity, substitution elasticity and advertising elasticity. Measurement techniques and factors that influence each type of elasticity are also discussed.
4) The practical importance of elasticity concepts for business decisions, tax policy, and economic analysis are outlined. Elasticity helps explain market behaviors and
Price elasticity of demand (PED) measures the responsiveness of quantity demanded to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. PED can be price elastic (PED > 1), unit elastic (PED = 1), price inelastic (PED < 1), perfectly inelastic (PED = 0), or perfectly elastic (PED approaches infinity). The elasticity determines how a price change will affect total revenue. Factors like availability of substitutes, percentage of income spent, and whether a product is a luxury or necessity influence a product's price elasticity.
The document provides an introduction to supply and demand, including definitions and key concepts. It discusses how supply is defined as the quantity of a commodity offered by producers at a given price and time. Market supply is the total quantity supplied by all producers. The price at which quantity demanded equals quantity supplied is called the equilibrium price. Factors that influence supply are then outlined, such as the price of the commodity, production costs, technology, and expectations. The document concludes by covering price elasticity of supply and the different types of elasticity curves (perfectly elastic, inelastic, unit elastic, etc.).
This presentation discusses different types of elasticity, including price elasticity of demand, income elasticity of demand, elasticity of substitution, cross elasticity of demand, and advertising elasticity of demand. It defines these concepts and provides examples of how each can be measured. The key types of elasticity discussed are perfectly elastic, relatively elastic, unitary elastic, relatively inelastic, and perfectly inelastic demand. Factors that can impact each type of elasticity are also outlined.
This document discusses the concept of price elasticity of demand (PED). It defines PED as a measure of how much quantity demanded of a good changes in response to a change in price. The document provides the formula for calculating PED and gives examples of its application. It describes different types of elasticities including inelastic, elastic, unit elastic, perfectly inelastic and perfectly elastic demand. It also discusses how PED relates to a good's total revenue and the factors that determine a good's price elasticity.
This document discusses elasticity of demand, which measures the responsiveness of quantity demanded to changes in factors like price. It defines price elasticity of demand as the percentage change in quantity demanded divided by the percentage change in price. Price elasticity can be perfectly inelastic (ep=0), unitary (ep=1), or perfectly elastic (ep=∞). Cross elasticity measures responsiveness to the price of a related good, while income elasticity measures responsiveness to changes in consumer income. Understanding elasticities helps businesses make pricing, taxation, and product differentiation decisions.
This document discusses the concept of elasticity in economics. It defines price elasticity of demand as a measure of how much quantity demanded responds to changes in price. Price elasticity of demand is calculated as the percentage change in quantity divided by the percentage change in price. Demand can be elastic, inelastic, or unitary elastic depending on how much quantity changes relative to price changes. Income elasticity of demand and price elasticity of supply are also defined and calculated. Supply is generally more elastic in the long run than short run.
The document discusses different types of demand elasticities, including:
1. Price elasticity of demand, which measures the responsiveness of quantity demanded to a change in price. It is calculated as the percentage change in quantity divided by the percentage change in price.
2. Income elasticity of demand, which measures the responsiveness of quantity demanded to a change in consumer income. It is calculated similarly to price elasticity.
3. Cross-price elasticity of demand, which measures the responsiveness of quantity demanded of one good to a change in the price of another good.
The elasticities depend on characteristics of the demand curve such as its slope and whether demand is inelastic, unit elastic,
This presentation discusses various types of elasticity, including price elasticity of demand, income elasticity of demand, cross elasticity of demand, and advertising elasticity of demand. It defines these concepts and explains how to measure each type of elasticity. The key types of elasticity discussed are perfectly inelastic, perfectly elastic, unitary elastic, and relatively elastic demands. Factors that influence each type of elasticity and the importance of understanding elasticity for business decision making are also summarized.
This document discusses elasticity of demand, including definitions and types. It defines elasticity as measuring the responsiveness of one variable to changes in another. There are different types of elasticity depending on what is changing, such as price elasticity (responsiveness of demand to price changes), income elasticity (responsiveness of demand to income changes), and cross elasticity (responsiveness of demand for one good to price changes in another good). The document discusses concepts like perfectly inelastic, perfectly elastic, and unit elastic demand curves, and provides examples of goods that fall under each category. It also outlines factors that influence a good's price elasticity and significance of understanding elasticities.
This document discusses price elasticity and arc elasticity of demand. It defines elasticity as measuring the responsiveness of one variable to a change in another. Price elasticity of demand specifically measures how quantity demanded responds to changes in price. It can be elastic (PED>1), inelastic (PED<1), or unitary (PED=1). Arc elasticity measures elasticity between two points using the midpoint formula, while point elasticity is the limit as the distance between points approaches zero. The document provides examples of computing price elasticity from demand curves and data tables.
This document defines four types of elasticity - price elasticity of demand, price elasticity of supply, income elasticity of demand, and cross elasticity of demand. It provides examples and explanations of each type. Key points include that elasticity measures the responsiveness of one variable to changes in another, and the factors that influence the elasticity of demand and supply such as availability of substitutes, time period, and whether a good is a necessity.
This document discusses the concept of elasticity of demand. It defines elasticity of demand as the measure of responsiveness of demand to changing prices. There are different types of elasticity including price elasticity, income elasticity, and cross elasticity. Price elasticity measures how quantity demanded responds to changes in price. Income elasticity measures how quantity demanded responds to changes in income. Cross elasticity measures how quantity demanded of one good responds to price changes of another good. Demand can be elastic, inelastic, perfectly elastic, or perfectly inelastic depending on the responsiveness to price changes. The document also discusses factors that determine price elasticity and different methods to measure elasticity including the total outlay method, proportional method,
The document discusses different types of elasticity of demand including price elasticity, income elasticity, and cross elasticity. It defines each type of elasticity using formulas and provides examples of how to calculate each. It also explains how businesses can use an understanding of elasticity of demand to inform pricing, product differentiation, and other strategic decisions.
Elasticity measures how responsive demand or supply is to changes in price. Price elasticity of demand specifically refers to the percentage change in quantity demanded given a percentage change in price. Elasticity is calculated using various methods and provides important insights for businesses in determining pricing and revenue impacts. Forecasting demand, including for new products, allows businesses to effectively plan resources and operations.
This document provides an overview of demand, price elasticity of demand, and their applications. It discusses:
1. What determines demand for a commodity.
2. How price elasticity of demand measures the responsiveness of quantity demanded to price changes.
3. Factors that influence price elasticity, including availability of substitutes and necessity of the good.
4. How elasticity can help firms understand the effects of price changes on total revenue.
5. Different types of elasticity curves and their implications for revenue and profit.
6. Uses of elasticity estimates for businesses, such as in pricing strategies and assessing tax impacts.
How to Make a Field Mandatory in Odoo 17Celine George
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
How to Build a Module in Odoo 17 Using the Scaffold MethodCeline George
Odoo provides an option for creating a module by using a single line command. By using this command the user can make a whole structure of a module. It is very easy for a beginner to make a module. There is no need to make each file manually. This slide will show how to create a module using the scaffold method.
Here are some ways the concept of price elasticity can be used in business decisions:
1. Maruti Udyog - If cross price elasticity of demand between Zen and Alto is high (i.e. they are close substitutes), then a price decrease for one model can help boost its sales by diverting demand from the other. This information helps in pricing strategies.
2. HP - Since laptops and printers are complements, a price decrease in one will lead to an increase in demand for both by virtue of complementarity. So bundle pricing or discounts on both can boost revenues.
3. Diamond factory - Since supply of skilled labor is fixed in short run, elasticity of supply of labor is low
This document provides an overview of elasticity concepts including:
1) Price elasticity of demand which measures the responsiveness of demand to price changes and includes perfectly elastic, relatively elastic, unitary, relatively inelastic, and perfectly inelastic demand.
2) Factors that affect price elasticity like the nature of the good, availability of substitutes, and proportion of income spent.
3) Practical importance of price elasticity for business decisions, tax policy, and international trade.
4) Income elasticity of demand which measures the responsiveness of demand to income changes and can be positive, negative, or zero. Measurement and factors like price are also discussed.
5) Elasticity of
This document provides an overview of elasticity concepts including:
1) Definitions of price elasticity of demand and its measurement. Price elasticity measures the responsiveness of demand to price changes.
2) The five types of price elasticity are defined with examples - perfectly elastic, relatively elastic, unitary, relatively inelastic, and perfectly inelastic.
3) Other elasticity concepts are introduced including income elasticity, cross elasticity, substitution elasticity and advertising elasticity. Measurement techniques and factors that influence each type of elasticity are also discussed.
4) The practical importance of elasticity concepts for business decisions, tax policy, and economic analysis are outlined. Elasticity helps explain market behaviors and
This document provides an overview of elasticity concepts including:
1) Definitions of price elasticity of demand and its measurement. Price elasticity measures the responsiveness of demand to price changes.
2) The five types of price elasticity are defined with examples - perfectly elastic, relatively elastic, unitary, relatively inelastic, and perfectly inelastic.
3) Other elasticity concepts are introduced including income elasticity, cross elasticity, substitution elasticity and advertising elasticity. Measurement techniques and factors that influence each type of elasticity are also discussed.
4) The practical importance of elasticity concepts for business decisions, tax policy, and economic analysis are outlined. Elasticity helps explain market behaviors and
Price elasticity of demand (PED) measures the responsiveness of quantity demanded to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. PED can be price elastic (PED > 1), unit elastic (PED = 1), price inelastic (PED < 1), perfectly inelastic (PED = 0), or perfectly elastic (PED approaches infinity). The elasticity determines how a price change will affect total revenue. Factors like availability of substitutes, percentage of income spent, and whether a product is a luxury or necessity influence a product's price elasticity.
The document provides an introduction to supply and demand, including definitions and key concepts. It discusses how supply is defined as the quantity of a commodity offered by producers at a given price and time. Market supply is the total quantity supplied by all producers. The price at which quantity demanded equals quantity supplied is called the equilibrium price. Factors that influence supply are then outlined, such as the price of the commodity, production costs, technology, and expectations. The document concludes by covering price elasticity of supply and the different types of elasticity curves (perfectly elastic, inelastic, unit elastic, etc.).
This presentation discusses different types of elasticity, including price elasticity of demand, income elasticity of demand, elasticity of substitution, cross elasticity of demand, and advertising elasticity of demand. It defines these concepts and provides examples of how each can be measured. The key types of elasticity discussed are perfectly elastic, relatively elastic, unitary elastic, relatively inelastic, and perfectly inelastic demand. Factors that can impact each type of elasticity are also outlined.
This document discusses the concept of price elasticity of demand (PED). It defines PED as a measure of how much quantity demanded of a good changes in response to a change in price. The document provides the formula for calculating PED and gives examples of its application. It describes different types of elasticities including inelastic, elastic, unit elastic, perfectly inelastic and perfectly elastic demand. It also discusses how PED relates to a good's total revenue and the factors that determine a good's price elasticity.
This document discusses elasticity of demand, which measures the responsiveness of quantity demanded to changes in factors like price. It defines price elasticity of demand as the percentage change in quantity demanded divided by the percentage change in price. Price elasticity can be perfectly inelastic (ep=0), unitary (ep=1), or perfectly elastic (ep=∞). Cross elasticity measures responsiveness to the price of a related good, while income elasticity measures responsiveness to changes in consumer income. Understanding elasticities helps businesses make pricing, taxation, and product differentiation decisions.
This document discusses the concept of elasticity in economics. It defines price elasticity of demand as a measure of how much quantity demanded responds to changes in price. Price elasticity of demand is calculated as the percentage change in quantity divided by the percentage change in price. Demand can be elastic, inelastic, or unitary elastic depending on how much quantity changes relative to price changes. Income elasticity of demand and price elasticity of supply are also defined and calculated. Supply is generally more elastic in the long run than short run.
The document discusses different types of demand elasticities, including:
1. Price elasticity of demand, which measures the responsiveness of quantity demanded to a change in price. It is calculated as the percentage change in quantity divided by the percentage change in price.
2. Income elasticity of demand, which measures the responsiveness of quantity demanded to a change in consumer income. It is calculated similarly to price elasticity.
3. Cross-price elasticity of demand, which measures the responsiveness of quantity demanded of one good to a change in the price of another good.
The elasticities depend on characteristics of the demand curve such as its slope and whether demand is inelastic, unit elastic,
This presentation discusses various types of elasticity, including price elasticity of demand, income elasticity of demand, cross elasticity of demand, and advertising elasticity of demand. It defines these concepts and explains how to measure each type of elasticity. The key types of elasticity discussed are perfectly inelastic, perfectly elastic, unitary elastic, and relatively elastic demands. Factors that influence each type of elasticity and the importance of understanding elasticity for business decision making are also summarized.
This document discusses elasticity of demand, including definitions and types. It defines elasticity as measuring the responsiveness of one variable to changes in another. There are different types of elasticity depending on what is changing, such as price elasticity (responsiveness of demand to price changes), income elasticity (responsiveness of demand to income changes), and cross elasticity (responsiveness of demand for one good to price changes in another good). The document discusses concepts like perfectly inelastic, perfectly elastic, and unit elastic demand curves, and provides examples of goods that fall under each category. It also outlines factors that influence a good's price elasticity and significance of understanding elasticities.
This document discusses price elasticity and arc elasticity of demand. It defines elasticity as measuring the responsiveness of one variable to a change in another. Price elasticity of demand specifically measures how quantity demanded responds to changes in price. It can be elastic (PED>1), inelastic (PED<1), or unitary (PED=1). Arc elasticity measures elasticity between two points using the midpoint formula, while point elasticity is the limit as the distance between points approaches zero. The document provides examples of computing price elasticity from demand curves and data tables.
This document defines four types of elasticity - price elasticity of demand, price elasticity of supply, income elasticity of demand, and cross elasticity of demand. It provides examples and explanations of each type. Key points include that elasticity measures the responsiveness of one variable to changes in another, and the factors that influence the elasticity of demand and supply such as availability of substitutes, time period, and whether a good is a necessity.
This document discusses the concept of elasticity of demand. It defines elasticity of demand as the measure of responsiveness of demand to changing prices. There are different types of elasticity including price elasticity, income elasticity, and cross elasticity. Price elasticity measures how quantity demanded responds to changes in price. Income elasticity measures how quantity demanded responds to changes in income. Cross elasticity measures how quantity demanded of one good responds to price changes of another good. Demand can be elastic, inelastic, perfectly elastic, or perfectly inelastic depending on the responsiveness to price changes. The document also discusses factors that determine price elasticity and different methods to measure elasticity including the total outlay method, proportional method,
The document discusses different types of elasticity of demand including price elasticity, income elasticity, and cross elasticity. It defines each type of elasticity using formulas and provides examples of how to calculate each. It also explains how businesses can use an understanding of elasticity of demand to inform pricing, product differentiation, and other strategic decisions.
Elasticity measures how responsive demand or supply is to changes in price. Price elasticity of demand specifically refers to the percentage change in quantity demanded given a percentage change in price. Elasticity is calculated using various methods and provides important insights for businesses in determining pricing and revenue impacts. Forecasting demand, including for new products, allows businesses to effectively plan resources and operations.
This document provides an overview of demand, price elasticity of demand, and their applications. It discusses:
1. What determines demand for a commodity.
2. How price elasticity of demand measures the responsiveness of quantity demanded to price changes.
3. Factors that influence price elasticity, including availability of substitutes and necessity of the good.
4. How elasticity can help firms understand the effects of price changes on total revenue.
5. Different types of elasticity curves and their implications for revenue and profit.
6. Uses of elasticity estimates for businesses, such as in pricing strategies and assessing tax impacts.
How to Make a Field Mandatory in Odoo 17Celine George
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
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Odoo provides an option for creating a module by using a single line command. By using this command the user can make a whole structure of a module. It is very easy for a beginner to make a module. There is no need to make each file manually. This slide will show how to create a module using the scaffold method.
Strategies for Effective Upskilling is a presentation by Chinwendu Peace in a Your Skill Boost Masterclass organisation by the Excellence Foundation for South Sudan on 08th and 09th June 2024 from 1 PM to 3 PM on each day.
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This presentation was provided by Steph Pollock of The American Psychological Association’s Journals Program, and Damita Snow, of The American Society of Civil Engineers (ASCE), for the initial session of NISO's 2024 Training Series "DEIA in the Scholarly Landscape." Session One: 'Setting Expectations: a DEIA Primer,' was held June 6, 2024.
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2. Elasticity
• We have seen that
– The quantity demanded of a consumer good is affected by
• its price, the prices of other goods, buyers’ incomes, etc.
– The quantity supplied of a good is affected by
• its price, the prices of raw materials, technology, etc.
• Elasticity is a measure of the strengths of these various effects
3. Elasticity = Responsiveness
• Suppose there are two variables, x and y
• The “x elasticity of y” is a measure of the effect on y of changes
in x
– when all other factors that affect y are unchanged
• In other words, the “x elasticity of y” is a measure of the
responsiveness of y to changes in x
4. Elasticity: definition
• The “x elasticity of y”
is the percent increase
in y
when there is a one percent increase
in x
– and all other factors that affect y are unchanged
5. Elasticity: examples
• The price elasticity of demand
is the percent increase
in the quantity demanded of a commodity
when there is a one percent increase
in the price of the commodity
– and all other factors that affect quantity demanded are unchanged
6. Elasticity: examples
• The income elasticity of demand
is the percent increase
in the quantity demanded of a commodity
when there is a one percent increase
in the buyers’ income
– and all other factors that affect quantity demanded are unchanged
7. Elasticity: examples
• The cross-price elasticity of demand
is the percent increase
in the quantity demanded of a commodity
when there is a one percent increase
in the price of another commodity
– and all other factors that affect quantity demanded are unchanged
8. Elasticity: examples
• The price elasticity of supply
is the percent increase
in the quantity supplied of a commodity
when there is a one percent increase
in the price of the commodity
– and all other factors that affect quantity supplied are unchanged
9. Elasticity
• For each of the elasticities we have just seen, we need to know
– how to measure it, and
– what makes it high in some situations and low in other situations,
and
– why it is useful
11. THE ELASTICITY OF DEMAND
• Price elasticity of demand is a measure of how strongly the
quantity demanded of a good responds to a change in the
price of that good.
See http://www.ers.usda.gov/data-products/commodity-and-food-elasticities.aspx for
various measures of elasticity of demand for various food products.
12. P.E.D. Computation
• The price elasticity of demand
is the percent increase
in the quantity demanded of a commodity
when there is a one percent increase
in the price of the commodity
– and all other factors that affect quantity demanded are unchanged
price
in
increase
percent
demanded
quantity
in
increase
percent
demand
of
elasticity
price
13. P.E.D. Computation
• Suppose
– the price of ice-cream increases by 10%, and
– the quantity demanded decreases by 20%.
• This is an increase of −20%
• P.E.D. = − (− 20)/10 = 2.
• That is, a 1% change in the price will change the quantity
demanded by 2%.
price
in
increase
percent
demanded
quantity
in
increase
percent
demand
of
elasticity
price
14. What does the P.E.D. depend on?
• Which commodity will have the lower price elasticity of
demand:
– gasoline or movies?
– insulin injections (for diabetes patients) or music downloads (on
iTunes)?
– alcoholic beverages in general or Miller beer?
• A 10 percent increase in gasoline prices reduces gasoline
consumption by about 2.5 percent after a year and about 6
percent after five years. Why?
15. Determinants of Price Elasticity of Demand
• P.E.D. of a consumer good tends to be higher…
– if it has many close substitutes
– if it is a luxury commodity
• That is, if the good’s income elasticity of demand is high
– if spending on the good is a large portion of total spending
– if it is narrowly (rather than broadly) defined
– if buyers are given more time to adjust to a price change
16. Income Elasticity of Demand
• The income elasticity of demand
is the percent increase
in the quantity demanded of a commodity
when there is a one percent increase
in the buyers’ income
– and all other factors that affect quantity demanded are unchanged
income
in
increase
%
demanded
quantity
in
increase
%
Demand
of
Elasticity
Income
17. Computing Income Elasticity of Demand
• Suppose:
– income increases 10%, and
– quantity demanded decreases 20%. Then
– income elasticity of demand is -20/+10 = -2.
• Note that I.E.D. can be positive, negative, or zero.
income
in
increase
%
demanded
quantity
in
increase
%
Demand
of
Elasticity
Income
18. Normal Goods and Inferior Goods
• Normal Goods: I.E.D. > 0
• Inferior Goods: I.E.D. < 0
• Higher income
raises the quantity demanded for normal goods, but
lowers the quantity demanded for inferior goods.
• Examples
19. Necessities and Luxuries
• When I.E.D. < 1, the good is called income
inelastic or a necessity
– Examples include food, fuel, clothing, utilities, and
medical services.
• When I.E.D. > 1, the good is called income
elastic or a luxury
– Examples include sports cars, furs, and expensive
foods.
20. High Income Elasticity Implies High Price Elasticity
• The effect of a change in the price of a good on its quantity
demanded is the sum of:
– The substitution effect, and
– The income effect
• See chapter 4
• The higher the I.E.D., the bigger the income effect. Therefore,
• The higher the I.E.D., the higher the P.E.D..
21. Low I.E.D. implies low P.E.D.
1. When the price of Coke
decreases…
2. Consumers
feel richer…
3. Consumption of Coke
increases, but only a little,
because Coke’s I.E.D. is
low
4. So, a decrease in the
price of Coke leads to a
small increase in the
consumption of Coke,
meaning that Coke’s P.E.D.
is low
Coke Books Movies
Clothes Pepsi
Suppose the income
elasticity of demand for
Coke is positive, but low
22. High I.E.D. implies high P.E.D.
2. Consumers
feel richer…
3. Consumption of Coke
increases by a big amount,
because Coke’s I.E.D. is
high
4. So, a decrease in the
price of Coke leads to a
big increase in the
consumption of Coke,
meaning that Coke’s P.E.D.
is high
Coke Books Movies
Clothes Pepsi
Suppose the income
elasticity of demand for
Coke is positive and high
1. When the price of Coke
decreases…
24. Computing the Percentage of a Price Change—
Usual Method
Old Price $2.00
New Price $2.20
Increase 2.20 – 2.00 = $0.20
% Increase [(2.20 – 2.00)/2.00] × 100 = 10%
100
value
old
value
old
value
new
change
percent
-
25. Computing the Percentage of a Quantity Change—
Usual Method
Old Quantity 10
New Quantity 8
Increase 8 – 10 = –2
% Increase [(8 – 10)/10] × 100 = –20%
100
value
old
value
old
value
new
increase
percent
-
26. Computing the Price Elasticity of Demand: Usual Method
• The price of an ice cream cone increases from $2.00 to $2.20
• The amount you buy falls from 10 to 8 cones
• What is your elasticity of demand?
( )
( . . )
.
10 8
10
100
2 20 2 00
2 00
100
20%
10%
2
price
in
increase
percent
demanded
quantity
in
increase
percent
demand
of
elasticity
price
27. Computing the Price Elasticity of Demand
• But what do you do if you have to compute the P.E.D. from the
demand schedule on the left?
• Here you do not know whether the price increased from 2 to 4
or decreased from 4 to 2
• What do you do in this case?
Price Quantity Demanded
2 10
4 8
28. Computing the Percentage Change in Price
• If the price (P) goes from 2 to 4 it is a 100% increase:
[(4 – 2) / 2] × 100 = 100
• If P goes from 4 to 2 it is a 50% decrease:
[(2 – 4) / 4] × 100 = – 50
• So, in the PED formula should we use 100 or – 50 for the percentage
increase in P?
• After all, both answers seem logical!
Price Quantity
2 10
4 8
100
value
old
value
old
value
new
increase
percent
-
29. Computing the Percentage Change in Price
• If the price (P) goes from 2 to 4 it is a 100% increase:
[(4 – 2) / 2] × 100 = 100
• If P goes from 4 to 2 it is a 50% decrease:
[(2 – 4) / 4] × 100 = – 50
• So, in the PED formula should we use 100 or – 50 for the percentage
increase in P?
• After all, both answers seem logical!
Price Quantity Demanded
2 10
4 8
100
value
old
value
old
value
new
increase
percent
-
An acceptable
compromise may be to
divide, not by 2, not by
4, but by the average
of 2 and 4
30. Computing the Percentage Change in Price:
Midpoint Formula
• A good compromise is the midpoint
formula
• Denote any one of the two rows of
numbers as “new” and the other as
“old”
• Then compute:
100
values
new"
"
and
old"
"
of
average
value
old"
"
value
new"
"
increase
percent
Price Quantity Demanded
2 10
4 8
If the (2,10)-row is “old”, the percent increase in P is (4 – 2)/3 × 100 = 66.67.
On the other hand, if the (4, 8)-row is “old”, the percent increase in P is (2 – 4)/3 × 100 = – 66.67.
Either way, the magnitude is the same.
31. Computing the Percentage Change in Quantity:
Midpoint Formula
• The percent increase in quantity can be
computed in the same way
• If the (2,10)-row is “old”, the percent
increase in Q is (8 – 10)/9 × 100 = – 22.22
• if the (4, 8)-row is “old”, the percent
increase in Q is (10 – 8)/9 × 100 = 22.22
• Either way, the magnitude is the same
100
values
new"
"
and
old"
"
of
average
value
old"
"
value
new"
"
increase
percent
Price Quantity Demanded
2 10
4 8
32. Computing the Price Elasticity of Demand
• Therefore, P.E.D. = 22.22 / 66.66 = 1/3
price
in
increase
percent
demanded
quantity
in
increase
percent
demand
of
elasticity
price
Price Quantity Demanded
2 10
4 8
33. The Midpoint Method: A Better Way to Calculate Percentage Changes and
Elasticities
• The midpoint formula is preferable when calculating the price
elasticity of demand because it gives the same answer
regardless of the direction of the change.
Price elasticity of demand =
( ) /[( ) / ]
( ) /[( ) / ]
Q Q Q Q
P P P P
2 1 2 1
2 1 2 1
2
2
34. ( )
( ) /
( . . )
( . . ) /
.
.
10 8
10 8 2
2 20 2 00
2 00 2 20 2
22%
95%
2 32
Midpoint Formula: example
• The price of an ice cream cone increases from $2.00 to $2.20
• The amount you buy falls from 10 to 8 cones
• What’s your elasticity of demand?
– use the midpoint formula
36. Elastic, Unit-Elastic and Inelastic Demand
• Demand can be
– Inelastic
– Unit-elastic
– Elastic
• … depending on the magnitude of the P.E.D.
37. Inelastic Demand: P.E.D. < 1
• Suppose:
– Price changes by 10%
– Quantity demanded changes by 5%.
• % change in quantity is smaller than the % change in price
• Here P.E.D. = 5/10 = 0.5 < 1
• Demand is inelastic
price
in
increase
percent
demanded
quantity
in
increase
percent
demand
of
elasticity
price
38. Unit-Elastic Demand: P.E.D. = 1
• Suppose:
– Price changes by 10%
– Quantity demanded changes by 10%.
• % change in quantity is equal to the % change in price
• Here P.E.D. = 10/10 = 1
• Demand is unit-elastic
price
in
increase
percent
demanded
quantity
in
increase
percent
demand
of
elasticity
price
39. Elastic Demand: P.E.D. > 1
• Suppose:
– Price changes by 10%
– Quantity demanded changes by 30%.
• % change in quantity is greater than the % change in price
• Here P.E.D. = 30/10 = 3 > 1
• Demand is elastic
price
in
increase
percent
demanded
quantity
in
increase
percent
demand
of
elasticity
price
41. Perfectly Inelastic and Perfectly Elastic Demand
• Perfectly Inelastic Demand
– Quantity demanded does not respond at all to price changes.
– P.E.D. = 0.
• Perfectly Elastic Demand
– Quantity demanded changes infinitely with any change in price.
– P.E.D. = infinity.
42. The Variety of Demand Curves
• Because P.E.D. measures how strongly quantity demanded
responds to the price, it is closely related to the slope of the
demand curve.
• The higher the price elasticity of demand, the flatter the
demand curve.
43. Figure 1 The Price Elasticity of Demand
(a) Perfectly Inelastic Demand: Elasticity Equals 0
$5
4
Quantity
Demand
100
0
1. An
increase
in price . . .
2. . . . leaves the quantity demanded unchanged.
Price
44. Figure 1 The Price Elasticity of Demand
(b) Inelastic Demand: Elasticity Is Less Than 1
Quantity
0
$5
90
Demand
1. A 22%
increase
in price . . .
Price
2. . . . leads to an 11% decrease in quantity demanded.
4
100
46. Figure 1 The Price Elasticity of Demand
(d) Elastic Demand: Elasticity Is Greater Than 1
Demand
Quantity
4
100
0
Price
$5
50
1. A 22%
increase
in price . . .
2. . . . leads to a 67% decrease in quantity demanded.
47. Figure 1 The Price Elasticity of Demand
(e) Perfectly Elastic Demand: Elasticity Equals Infinity
Quantity
0
Price
$4 Demand
2. At exactly $4,
consumers will
buy any quantity.
1. At any price
above $4, quantity
demanded is zero.
3. At a price below $4,
quantity demanded is infinite.
49. Total Revenue and the Price Elasticity of Demand
• Total revenue (TR) is the amount paid by buyers (and,
therefore, received by sellers) of a good.
• It is computed as the price of the good times the quantity sold.
TR = P x Q
50. P × Q = $400
(revenue)
Figure 2 Total Revenue
Demand
Quantity
Q
P
0
Price
$4
100
51. Elasticity and Total Revenue: Inelastic Demand
• Suppose demand is
inelastic
• Specifically, suppose
– Price increases by 10%,
and
– Quantity demanded
decreases by 4%.
TR = P × Q
+10% - 4%
+6%
Conclusion: When demand
is inelastic, price and total
revenue move in the same
direction.
52. Elasticity and Total Revenue: Elastic Demand
• Suppose demand is
elastic
• Specifically, suppose
– Price increases by 10%,
and
– Quantity demanded
decreases by 25%.
TR = P × Q
+10% - 25%
- 15%
Conclusion: When demand
is elastic, price and total
revenue move in opposite
directions.
53. Elasticity and Total Revenue: Unit-elastic Demand
• Suppose demand is unit-
elastic
• Specifically, suppose
– Price increases by 10%,
and
– Quantity demanded
decreases by 10%.
TR = P × Q
+10% - 10%
No Change
Conclusion: When demand
is unit-elastic, price has
no effect on total revenue.
54. Elasticity of a Linear Demand Curve
• Note that demand can change from elastic to unit-elastic to
inelastic as the price changes
• That is, in addition to the other factors discussed before, P.E.D.
also depends on the price
56. Cross Price Elasticity of Demand
• The cross price elasticity of demand (C.P.E.D.)
measures the responsiveness of the quantity
demanded of one good to changes in the price of
some other good.
• Suppose:
– The price of Coke increases 2%, and
– The consumption of Pepsi increases 20%.
– The C.P.E.D. for Coke with respect to Pepsi is +20/+2 =
+10.
57. Substitutes: C.P.E.D. > 0
• When the C.P.E.D. for one good with respect to another is
positive, the two goods are called substitutes.
• In the last slide’s example, the C.P.E.D. for Coke with respect
to Pepsi was +10, which is positive.
• This confirms our common-sense intuition that Coke and Pepsi
are substitutes.
58. Complements: C.P.E.D. < 0
• When the C.P.E.D. for one good with
respect to another is negative, the two
goods are called complements.
• Suppose:
– the price of gasoline increases 50%
– the sale of cars decreases 10%
– The C.P.E.D. is -10/+50 = -0.2, which is
negative.
• This is what one would expect, given
our common-sense notion that gas and
cars are complements.
59. THE ELASTICITY OF SUPPLY
• Price elasticity of supply is a measure of how strongly the
quantity supplied of a good responds to a change in the price
of that good.
60. Elasticity: examples
• The price elasticity of supply
is the percent increase
in the quantity supplied of a commodity
when there is a one percent increase
in the price of the commodity
– and all other factors that affect quantity supplied are unchanged
price
in
increase
%
supplied
quantity
in
increase
%
supply
of
elasticity
price
61. Figure 6 The Price Elasticity of Supply
(a) Perfectly Inelastic Supply: Elasticity Equals 0
$5
4
Supply
Quantity
100
0
1. An
increase
in price . . .
2. . . . leaves the quantity supplied unchanged.
Price
62. Figure 6 The Price Elasticity of Supply
(b) Inelastic Supply: Elasticity Is Less Than 1
110
$5
100
4
Quantity
0
1. A 22%
increase
in price . . .
Price
2. . . . leads to a 10% increase in quantity supplied.
Supply
63. Figure 6 The Price Elasticity of Supply
(c) Unit Elastic Supply: Elasticity Equals 1
125
$5
100
4
Quantity
0
Price
2. . . . leads to a 22% increase in quantity supplied.
1. A 22%
increase
in price . . .
Supply
64. Figure 6 The Price Elasticity of Supply
(d) Elastic Supply: Elasticity Is Greater Than 1
Quantity
0
Price
1. A 22%
increase
in price . . .
2. . . . leads to a 67% increase in quantity supplied.
4
100
$5
200
Supply
65. Figure 6 The Price Elasticity of Supply
(e) Perfectly Elastic Supply: Elasticity Equals Infinity
Quantity
0
Price
$4 Supply
3. At a price below $4,
quantity supplied is zero.
2. At exactly $4,
producers will
supply any quantity.
1. At any price
above $4, quantity
supplied is infinite.
66. Determinants of Elasticity of Supply
• The price elasticity of supply is high
– if the technology enables sellers to change the amount of the good
they produce.
• Beach-front land has inelastic supply.
• Books, cars, or manufactured goods have elastic supply.
– if suppliers have time to respond to a price change
• Supply is more elastic in the long run.
68. THREE APPLICATIONS OF SUPPLY, DEMAND, AND ELASTICITY
• Can good news for farming be bad news for farmers?
• What happens to wheat farmers and the market for wheat
when university agronomists discover a new wheat hybrid that
is more productive than existing varieties?