《西方经济学》英文版课件-5.ppt

C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 5.1 THE PRICE ELASTICITY OF DEMAND Demand function Price elasticity of demand(需求價格彈性) A measure of the extent to which the quantity demanded of a good changes when the price of the good changes. To determine the price elasticity of demand, we compare the percentage change in the quantity demanded with the percentage change in price. 5.1 THE PRICE ELASTICITY OF DEMAND Percentage Change in Price 5.1 THE PRICE ELASTICITY OF DEMAND Suppose Starbucks cuts the price of a latte from $5 to $3 a cup. What is the percentage change in price? 5.1 THE PRICE ELASTICITY OF DEMAND The same price change, $2, over the same interval, $3 to $5, is a different percentage change depending on whether the price rises or falls. We need a measure of percentage change that does not depend on the direction of the price change. We use the average of the initial price and the new price to measure the percentage change. 5.1 THE PRICE ELASTICITY OF DEMAND The Midpoint Method(弧彈性) 5.1 THE PRICE ELASTICITY OF DEMAND The percentage change in price calculated by the midpoint method is the same for a price rise and a price fall. 5.1 THE PRICE ELASTICITY OF DEMAND Percentage Change in Quantity Demanded 5.1 THE PRICE ELASTICITY OF DEMAND Minus Sign When the price rises, the quantity demanded decreases along the demand curve. Price and quantity always change in opposite directions. So to compare the percentage change in the price and the percentage change in the quantity demanded, we ignore the minus sign and use the absolute values. 5.1 THE PRICE ELASTICITY OF DEMAND Elastic and Inelastic Demand Elastic demand Demand is elastic if the percentage change in the quantity demanded exceeds the percentage change in price. Unit elastic demand If the percentage change in the quantity demanded equals the percentage change in price. 5.1 THE PRICE ELASTICITY OF DEMAND Inelastic demand If the