Presentation On Micro Supply And Demand
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Presentation on Application of Supply & Demand Daffodil International University 19 August, 2006
Prepared for
Prepared by Md. Azmain Rahman Mohammed Ali Safayat Md. Faisal Md.Rakibul Islam
ID :052-11-807 ID :052-11-798 ID :052-11-787 ID:052-11 -776 ID:
Calculating Elasticities:
Case A: Price=90 and Quantity=240 Case B: 110 and quantity=160 Percentage price change= P/P=20/100=20% Percentage quantity change= Q/Q= -80/200=-40% Price elasticity=ED= 40/20=2
We have to careful about three key steps: Recall that we drop the minus sign from the numbers, thereby treating all percentage change as positive. The definition of elasticity uses percentage changes in price and demand rather than absolute changes. The use of averaging to calculate percentage changes in price and quantity.
Price elasticity of demand falls into three categories:
Perfectly elastic and inelastic demands:
Slope and elasticity are not the same thing:
Elasticity and Revenue: When demand is price inelastic, a price decrease reduces total revenue. When demand is price elastic, a price decrease increase total revenue. In the borderline case of unit elastic demand, a price decrease leads to no change in total revenue.
Supply elasticity depends upon producer response to price:
The economics of agriculture:
Prepared for
Prepared by Md. Azmain Rahman Mohammed Ali Safayat Md. Faisal Md.Rakibul Islam
ID :052-11-807 ID :052-11-798 ID :052-11-787 ID:052-11 -776 ID:
Calculating Elasticities:
Case A: Price=90 and Quantity=240 Case B: 110 and quantity=160 Percentage price change= P/P=20/100=20% Percentage quantity change= Q/Q= -80/200=-40% Price elasticity=ED= 40/20=2
We have to careful about three key steps: Recall that we drop the minus sign from the numbers, thereby treating all percentage change as positive. The definition of elasticity uses percentage changes in price and demand rather than absolute changes. The use of averaging to calculate percentage changes in price and quantity.
Price elasticity of demand falls into three categories:
Perfectly elastic and inelastic demands:
Slope and elasticity are not the same thing:
Elasticity and Revenue: When demand is price inelastic, a price decrease reduces total revenue. When demand is price elastic, a price decrease increase total revenue. In the borderline case of unit elastic demand, a price decrease leads to no change in total revenue.
Supply elasticity depends upon producer response to price:
The economics of agriculture:
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