# What Do You Understand By The Own Price Elasticity Of Demand For A Good?

922 words - 4 pages

What do you understand by the own-price elasticity of demand for a good?

1. (a) What do you understand by the own-price elasticity of demand
for a good?

(b) Will a linear (straight line) demand curve have a constant

(c) Following the terrorists attacks in the USA on 11 September, there
was a marked fall in business travel. In respomse, many hotels cut
their prices to business travellers; for example the Hyatt Hotel group
offered discounts of up to 50 per cent off regular room rates. Under
what circumstances would this lead to increased revenue for these
hotels?

Before we define the meaning of the own-price elasticity for a good we
must understand elasticity and its concept in general. Elasticity is
basically a comparison between the sizes of change in the quantity
demanded, in the case of the own-price elasticity, of a certain good
and in the variable that caused this change. According to Mankiwelasticity
is a measure of the responsiveness of quantity demanded or quantity
supplied to one of its determinants. The law of demand implies that an
increase in a price of a good will subsequently lead to a fall in the
quantity demanded for that good. The formulae which calculates this
amount is the division of the percentage of change in quantity
demanded by the percentage of change in price. The sign of price
elasticity of demand, and elasticity as well, is always going to be
negative due to the fact that quantity and price demanded are usually
in opposite directions. Elasticity is going to be negative as well
since neither the percentage change in price nor the the percentage
change in quantity are going to be positive according to which one
will rise or fall. Despite that, elasticity will be treated always as
a positive figure in order to avoid inconvience when dealing with
price elasticity of demand. There are five different ranges of
variance of price elasticity of demand and the first one occurs when
demand is elastic. This is happening when the value of the price of
elasticity of demand is positive and the percentage change in quantity
is larger than the percentage change in price. This is an indication
of demand responding to the change of the price of a ceratin good. The
second range occurs when demand is inelastic. This happens when the
PED value is less than one and the percentage change in quantity
demanded is smaller than the percentage change in price. This shows
that demand does not respond to the change of the price of a good. The
third range occurs when demand is unit elastic. This happens when the
PED is equal to one and the percentage of the change in quantity
demanded is equal to the percentage of the change in price. This
indicates that demand remains the...

## Find Another Essay On What do you understand by the own-price elasticity of demand for a good?

### What do you understand by the term least-cost solution and in what sense is it a "solution"?

1180 words - 5 pages performance to generate maximum profit. The firm should minimize costs that do not have a direct influence on sales and output.A firms inputs and their expenditure (Factors of Production) have a strong influence on the cost of a firms output. If a firm increases its production due to a rapid increase in demand, there may be a delay in acquiring the necessary inputs/resources. For example a firm can employ more labour to manufacture more produce

### What do you understand by 'Ostalgie' and to what extent is the term appropriate to describe Wolfgang Becker's Good Bye, Lenin!?

2313 words - 9 pages Germ10311:Contemporary German Culture 7027318 What do you understand by 'Ostalgie' and to what extent is the term appropriate to describe Wolfgang Becker's Good Bye, Lenin!?Ostalgie is composed of the two German words Osten and Nostalgie. Osten refers to the former German Democratic Republic and the meaning of Nostalgie in English is the sentimental memory of or longing for things of the past in a fairly general sense. This longing for the days

### Discuss the factors, which affect demand: Explain the concept of price elasticity of demand and its significance to governments and producers.

699 words - 3 pages price. A shift in the demand curve could be resulting from changes in tastes, real income, population size and composition, consumer expectations or technological progress. These factors often work simultaneously to increase or decrease demand. However these factors do not apply similarly to all goods. The demand for generic brand products decreases as income rises.The price elasticity of demand refers to the responsiveness of quantity demanded

### What do you understand to be the concept of entrepreneurship and why

1461 words - 6 pages What do you understand to be the concept of entrepreneurship and why has it become such an important area of focus? Q2) What do you understand to be the concept of entrepreneurship and why has it become such an important area of focus? The concept of entrepreneurship is often viewed as a function, which involves the exploitation of opportunities, which exist within a market. Such exploitation is most commonly associated with the

### Research question: What do you understand by the term neo-liberalism? Discuss the author’s critique of the neoliberal analysis of the role of the state. What does he present as an alternative...

1409 words - 6 pages TOPIC2: IDEAS SHAPING THE GLOBAL ECONOMYResearch question:What do you understand by the term neo-liberalism? Discuss the author's critique of the neoliberal analysis of the role of the state. What does he present as an alternative "institutional political economy"?Neo-liberalism is a set of economic policies that have become widespread during the last 25 years approximately. The term stems from the original "liberal" economics of Adam Smith

### What do You Understand by Recombinant DNA Technology? Discuss the Moral, Ethical, Social, Economic and Environmental Issues Associated with the Technology, giving your views.

1671 words - 7 pages What do You Understand by Recombinant DNA Technology?Discuss the Moral, Ethical, Social, Economic and Environmental Issues Associated with the Technology, giving your views.There are two essential substances found inside bacterial cells required before the process can begin. Present in the cytoplasm of a bacterial cell are a number of small circular pieces of DNA known as plasmids. Also present within the bacterial cell are restriction enzymes

### What do you understand by the term marketing environment? Describe how a company may control and/or adapt to its marketing environment so as to develop an efficient strategy. Give suitable examples.

1070 words - 4 pages meal. When it comes to technology, more and more people are becoming computer literate. What better and cheaper way to reach a large number of people from anywhere in the world than to advertise on the internet? Marketers have noticed a "Boom-and-bust" cycle in the economy which shows that every eight years or so national economies tend to go into recession. The company can prepare for this by cutting costs, surplus stock and overheads, such as

### How do you understand Sun Tzu's concept of "Know the enemy and know yourself" and what is the significance of this concept in modern wars?

1110 words - 4 pages ? What are his strengths and weaknesses? Can he be exploited? The commander must understand what the enemy plans to do in order to evaluate friendly courses of action. In Sun Tzu's words, "Determine the enemy's plans and you will know which strategy will be successful and which will not." War can not be conducted successfully in a vacuum by only one side - so you must know the enemy.Third, what is the battle space? Sun Tzu's first two admonitions

### What should the government do about segregation in our public schools today? Does it matter to you, that students often attend public schools that are populated only by students of their own race?

665 words - 3 pages removed.National governments can try to do what they did not do back in the seventies. The national governments should pass laws to give state and local governments' power to try to help desegregate the public schools. One of the laws could be for example, that all state governments have the power to come into the public schools and see how the classes are sorted. If they come in and see that some classes are only filled with a single race then they can go

### How do the sources you studied help to create a better understand of women in industry in the two world wars

1831 words - 8 pages delivering a propagandised image as there are dark skies in the background, only to be illuminated by this woman’s aura of light and freedom, which is a glorified image of what some would perceive as an angel; she has a radiant face and around her face us a halo which acts as being sudo-religious, implying that the working in factories is encouraged by God and that doing so will please him. This same transcendent aura is around the factories

### It has been argued by critics that up until the end of the play, Othello fails to realise his own guilt. Do you agree?

595 words - 2 pages wanted to end up, but had no exact route, and Othello's weak mind didn't make it any harder for paths to open up for him. For instance, Iago didn't actually plan for Othello to kill Desdemona, this came as a bonus. In fact, it was Othello who first thought in terms of murder, when in an emotional outburst he cried, "I'll tear her to all pieces!" when referring to Desdemona being unfaithful.Othello's guilt in the tragedy can be clearly seen by all

## Similar Essays

### Economics Price Elasticity Of Demand

540 words - 2 pages indicates whether revenue will increase or decrease.SubstituteCross-price elasticity of demand is calculated as the percent change in demand divided by the percent change in price of the substitute and will determine the magnitude of the shift in the demand curve. Price elasticity is always positive for two substitutes.ComplementCross-price elasticity of demand is calculated as the percent change in demand divided by the percent change in price. A

### Define And Explain Price Elasticity Of Demand

1316 words - 5 pages : Percentage Change in Quantity Demanded Percentage Change in Price      One determinant of price elasticity is the number and closeness of substitutes there are available for a good. The closer the goods are, the greater will be the price elasticity of demand of that good. The reason for this being that people will be able to switch to the substitutes when the price of the original good goes up. The greater the number of substitutes and the closer

### Price, Income And Cross Elasticity Of Demand

1482 words - 6 pages of demand is a positive number the goods will be substitutesfor each other, meaning an increase in the price of good A will lead to an increase indemand for the good B (and vice versa). An example of this would be butter andmargarine, if the price of butter were to raise by too much people who previouslybought butter would switch to the now cheaper margarine.If cross elasticity of demand is a negative number the goods will becomplementary products

### Supply And Demand And Price Elasticity Paper

1041 words - 4 pages competition. "In many cases, monopolies arise because the government has given one person or firm the exclusive right to sell some good or service" (Mankiw, 2007). The price of a product is determined by the company, and they can say what a product could sell for and what they think buyers will pay for the product. The third structure is oligopoly. An Oligopoly is "a market structure in which only a few sellers offer similar or identical products