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Unit 2 · Microeconomics

Chapter 2 · Elasticities

📋 Reference · always available
PED
PED=% ΔQd% ΔP\text{PED} = \frac{\%\,\Delta Q_d}{\%\,\Delta P}
Elastic / inelastic
∣PED∣>1|PED|>1 elastic · =1=1 unit · <1<1 inelastic.
Determinants
Substitutes, necessity vs luxury, income share, time horizon.
Revenue rule
Elastic: price ↑ → revenue ↓. Inelastic: price ↑ → revenue ↑.