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UTILITY ANALYSIS: A subset of consumer demand theory that analysis consumer behavior and market demand using total utility and marginal utility. The key principle of utility analysis is the law of diminishing marginal utility, which offers an explanation for the law of demand and the negative slope of the demand curve.
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Lesson 12: Elasticity and Demand | Unit 3: Measurement
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Page: 17 of 25
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In this unit, you should have learned about:- Calculating the price elasticity of demand using the midpoint formula.
- How the price elasticity of demand takes on a range of values over a demand schedule.
- Why a straight-line demand curve contains all five elasticity alternatives -- perfectly elastic, relatively elastic, unit elastic, relatively inelastic, and perfectly inelastic.
- The difference between slope measured in actual units and elasticity measured in relative values.
- Why elasticity changes along demand curve from high prices and small quantities to low prices and large quantities..
- The relation between total expenditures on a good and the five elasticity alternatives on a demand curve.
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UNIT ELASTIC An elasticity alternative in which changes in one variable (usually price) cause equal proportional changes in another variable (usually quantity). In other words, any change in price, whether big or small, triggers exactly the same percentage change in quantity. Quantity changes match price changes. This characterization of elasticity is most important for the price elasticity of demand and the price elasticity of supply. Unit elastic is one of five elasticity alternatives. The other four are perfectly elastic, perfectly inelastic, relatively elastic, and relatively inelastic.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time going from convenience store to convenience store hoping to buy either blue cotton balls or a genuine down-filled pillow. Be on the lookout for celebrities who speak directly to you through your television.
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This isn't me! What am I?
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The penny is the only coin minted by the U.S. government in which the "face" on the head looks to the right. All others face left.
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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NYCE
New York Cotton Exchange
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