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WHEALER-LEA ACT: This was a major amendment to the Federal Trade Commission Act, passed in 1938, that gave powers to the Federal Trade Commission to investigate unfair and deceptive business practices and to prevent false advertising. The Whealer-Lea Act was a major step in moving the Federal Trade Commission into its current role as more of a consumer protection agency than a monopoly buster.

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Lesson 12: Elasticity and Demand | Unit 3: Measurement Page: 10 of 25

Topic: Doing The Numbers <=PAGE BACK | PAGE NEXT=>

  • Suppose we have the following price and quantity values for the demand of calling minutes in cellular phones:

    P1 = 10 cents, Q1 = 5 million minutes, P2 = 11 cents, and Q2 = 4.5 million minutes.

  • Plugging theses numbers into the formula gives us:

    elasticity=- 0.105 ÷ 0.095=- 1.105

  • While the quick and dirty elasticity indicates exactly unit elastic demand (1 on the nose), the midpoint formula indicates relatively elasticity demand (1.105).

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RELATIVELY ELASTIC

An elasticity alternative in which relatively small changes in one variable (usually price) cause relatively large changes in another variable (usually quantity). In other words, quantity is very responsive to price. Quantity changes a lot in response to small changes in price. This characterization of elasticity is most important for the price elasticity of demand and the price elasticity of supply. Relatively elastic is one of five elasticity alternatives. The other four are perfectly elastic, perfectly inelastic, relatively inelastic, and unit elastic.

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Today, you are likely to spend a great deal of time browsing about a thrift store trying to buy either a box of multi-colored, plastic paper clips or several orange mixing bowls. Be on the lookout for the last item on a shelf.
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More money is spent on gardening than on any other hobby.
"It is not because things are difficult that we do not dare; it is because we do not dare that they are difficult. "

-- Seneca, statesman, dramatist, philosopher

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