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Chapter 6: Elasticity - Coggle Diagram
Chapter 6: Elasticity
Lesson 2
Application of Price Elasticity of Demand
Excise Taxes
Decriminalization of illegal drugs
Large crop yields
Price Elasticity of Suppy
Supply unit elastic (Es=1)
Supply inelastic Es<1)
Supply Elastic (Es>1)
Supply perfectly inelastic (Es=0)
Determinant of Elasticity of Supply
Short run
Long run
Immediate market period
Determinants of Price Elasticity of Demand
Proportion of income
Luxuries vs necessities
Substitutability
Time
Application of Price Elasticity of Supply
Reproductions (more elastic supply)
Volatile gold prices (inelastic supply)
Antiques (Inelastic supply)
Lesson 1
Price Elasticity of Demand
Demand inelastic (Ed<1)
Extreme cases
Demand Perfectly Inelastic (Ed=0)
Demand Perfectly Elastic (Ed=∞)
Demand unit elastic (Ed=1)
Demand elastic (Ed>1)
Total Revenue (TR) Test
TR Test with Unit Elastic Demand
TR Test with Elastic Demand
TR Test with Inelastic Demand
Lesson 3
Income Elasticity of Demand
Insights
High income elasticity
Low income elasticity
Income Elasticity - Responsiveness to goods
Normal goods (elasticity = positive)
Inferior goods (elasticity = negative)
Cross Elasticity of Demand
Cross Elasticity -Responsiveness to goods
Complement goods (elasticity = negative)
Independent goods (elasticity =0)
Substitute goods (elasticity = positive)
Application of Cross Elasticity of Demand
Company change a price?
Government allow merger?