The greater the absolute value of the price elasticity of demand, the greater the responsiveness of quantity demanded to a price change.
change in quantity demanded is higher than the change in price, bad for revenue
7 Matching Annotations
- Sep 2025
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socialsci.libretexts.org socialsci.libretexts.org
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Price inelastic demand means only that the percentage change in quantity is less than the percentage change in price
change in quantity demanded is less than the change in price, raises revenue if price increases
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20,000/50,000,
difference divided by average
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socialsci.libretexts.org socialsci.libretexts.org
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Remember that the reduction in quantity supplied is a movement along the supply curve—the curve itself does not shift in response to a reduction in price. Similarly, the increase in quantity demanded is a movement along the demand curve—the demand curve does not shift in response to a reduction in price
this things move along the curve because they are already on the X/Y axis, other factors are not
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More generally, a surplus is the amount by which the quantity supplied exceeds the quantity demanded at the current price.
company overproducing, the price exceeds the equilibrium price (the price they should be asking for) ex. they produce 35 million and $8, but buyers consume 15 million at that price surplus = 20 million lbs
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socialsci.libretexts.org socialsci.libretexts.org
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The law of increasing opportunity cost holds that as an economy moves along its production possibilities curve in the direction of producing more of a particular good, the opportunity cost of additional units of that good will increase.
the more you produce one good (a) over another (b), the more the opportunity cost of producing that good (a) will increase.
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Plant 3 has a comparative advantage in snowboard production because it is the plant for which the opportunity cost of additional snowboards is lowest.
slope is the smallest, OC is the lowest, plant 3 has highest comparative advantage
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