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Economics Varying elasticities

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Hello! My economics teacher is quite honestly useless at explaining the theory behind his diagrams. He just draws emm up and expects us to comprehend them intuitively. Being a little behind the curb I'm always a little behind :P

Was wondering...

I don't quite understanding the reasoning behind the fact that elasticities vary along a linear demand curve. (Infinite at the top. 1 in the middle. less than 1 and bigger than zero at the bottom lest i misremember?)

Does anybody have a reasonable explanation for this!? I could just remember this information But I really cannot grasp WHY it is this way. It's eating me up.

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It is because of the reason that elasticity is not the gradient of the curve, instead it is the procentual change of delta(x) and the procentual change of delta(y). For example, If you are close to the bottom, changing the price one stop might be a large hop, compared to where your original price was. On the other hand, if you you move one unit up or down close to the top of the intersection of the demand curve the procentual change is not that much.

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Wow, a one month old post...

Price elasticity of demand (PED) is measured by:

the percentage change of the quantity demanded over the percent change in price.

At different pairs of points in the curve, the coefficient of Elasticity of demand changes.

For example: (taken from the CC)

When price falls from 20$ to 18$, quantity demanded increases from 60 to 80 units.

The PED value is calculated as 3.3.

Here's another value/

On the same demand curve, when price falls from 10$ to 8$, quantity demanded increases from 160 to 180 units. Thus the PED value is calculated as 0.625

As you can see, at smaller prices, the demand is more inelastic.

At larger prices, the demand is more elastic. The examples above show values increasing and decreasing by the same amount, but the % change is the reason why the PED varies along the curve.

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