Elasticity ppt @ bec doms
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Elasticity ppt @ bec doms
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Elasticity ppt @ bec doms
- 1. ELASTICITY
- 2. ELASTICITY
- 12. DEMAND CURVES 0 Quantity Price perfectly elastic demand perfectly inelastic demand
- 28. ADVERTISING ELASTICITY: ESTIMATES If advertising elasticities are so low, why do manufacturers of beer, wine, cigarettes advertise so heavily? Item Market Elasticity Beer U.S. 0 Wine U.S. 0.08 Cigarettes U.S. 0.04
Notes de l'éditeur
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- 2 Elasticity of demand: the responsiveness of demand to changes in an underlying factor; there is an elasticity corresponding to every factor that effects demand
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- 7 Arc approach to deriving the own-price elasticity of demand: calculate the percentage change in the quantity demanded divided by the percentage change in price; Example: suppose that, when cigarette price rises from $1.0/pack to $1.1, quantity demanded changes from 1.5 to 1.44 billion packs; then, elasticity = -4.1/9.5 = -0.432. Contrast with the point approach to deriving the own-price elasticity of demand calculates the coefficient from a mathematical equation, in which the quantity demanded is a function of the price and other variables.
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- 11 Distinguish between the own-price elasticity of demand and the slope of a demand curve; example -- straight-line demand curve: same slope throughout, but different elasticity at every point; steeper is the demand curve, the less elastic is demand, and vice versa. Own-price elasticity can also vary with changes in any of the other factors that affect demand.
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- 18 Price increase would always reduce sales; real question: how would it affect profit ? answer depends, in part, on price elasticity of demand
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- 20 Buyer’s expenditure = seller’s revenue; if demand is elastic, reduction in purchases will be proportionately greater than price increase, hence expenditure will fall if demand is inelastic, reduction in purchases will be proportionately less than price increase, hence expenditure will increase;
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- 28 Answer: the Table shows advertising elasticities for market demand brand owners advertise to draw customers from each other – brand-level demand is more sensitive to advertising
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