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Understanding Demand Elasticity: Key Concepts & Examples

Explore the concept of demand elasticity, including elastic and inelastic types, specific and general market examples, and determinants affecting elasticity in the market. Discover how price changes impact quantity demanded.

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Understanding Demand Elasticity: Key Concepts & Examples

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  1. Elasticity of Demand Chapter 4 Section 3

  2. Demand Elasticity • Demand Elasticity: the extent to which a change in P causes a change in the Q demanded 2 types • 1. Elastic = small change in P causes a large change in Q demanded • example = fresh fruit

  3. 2. Inelastic = a change in P causes a smaller change or no change in Q demanded • Example: gas

  4. Specific vs. General Market Examples: • Specific: Exxon Gas Station • If P increases, people would go somewhere else: therefore it is elastic (flexible) • General: All Gas Stations • If P increases, people will have to pay the increase, therefore it is inelastic (nonflexible)

  5. Determinants of Elasticity If NO = inelastic If YES = elastic

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