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# 经济代写|宏观经济学代考Macroeconomics代写|Is the Demand Curve Elastic or Inelastic?

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## 经济代写|宏观经济学代考Macroeconomics代写|Is the Demand Curve Elastic or Inelastic?

It is important to understand the basic intuition behind elasticities, which requires a focus on the percentage changes in quantity demanded and price.

Think of elasticity as an elastic rubber band. If the quantity demanded is responsive to even a small change in price, we call it elastic. On the other hand, if even a huge change in price results in only a small change in quantity demanded, then the demand is said to be inelastic. For example, if a 10 percent increase in the price leads to a 50 percent reduction in the quantity demanded, we say that demand is elastic because the quantity demanded is sensitive to the price change.
$$E_{\mathrm{D}}=\frac{\% \Delta Q_{\mathrm{D}}}{\% \Delta P}=\frac{50 \%}{10 \%}=5$$

Demand is elastic in this case because a 10 percent change in price led to a larger (50 percent) change in quantity demanded.

Alternatively, if a 10 percent increase in the price leads to a 1 percent reduction in quantity demanded, we say that demand is inelastic because the quantity demanded did not respond much to the price reduction.
$$E_{\mathrm{D}}=\frac{\% \Delta Q_{\mathrm{D}}}{\% \Delta P}=\frac{1 \%}{10 \%}=0.10$$
Demand is inelastic in this case because a 10 percent change in price led to a smaller ( 1 percent) change in quantity demanded.

## 经济代写|宏观经济学代考Macroeconomics代写|Types of Demand Curves

Economists refer to a variety of demand curves based on the magnitude of their elasticity. A demand curve, or a portion of a demand curve, can be elastic, inelastic, or unit elastic.
Demand is elastic when the elasticity is greater than $1\left(E_{\mathrm{D}}>1\right)$-the quantity demanded changes proportionally more than the price changes. In this case, a given percentage increase in price, say 10 percent, leads to a larger percentage change in quantity demanded, say 20 percent, as seen in Exhibit 1(a). If the curve is perfectly elastic, the demand curve becomes horizontal. When the demand is perfectly elastic, the quantity demanded is extremely responsive to changes in prices. For example, buyers might be willing to buy all of a seller’s wheat at $\$ 5$a bushel but none at$\$5.10$. That is, a small percentage change in price causes an enormous change in quantity demanded (from buying all to buying nothing). In Exhibit 1(b), a perfectly elastic demand curve (horizontal) is illustrated.

Demand is inelastic when the elasticity is less than 1 ; the quantity demanded changes proportionally less than the price changes. In this case, a given percentage (for example, 10 percent) change in price is accompanied by a smaller (for example, 5 percent) reduction in quantity demanded, as seen in Exhibit 2(a). If the demand curve is perfectly inelastic, the quantity demanded is the same regardless of the price. Examples of goods that are extremely price inelastic are insulin and heroin. Insulin to a person who has an acute case of diabetes is so important that a rise or fall in price will not have an impact on the quantity the person buys. Similarly, the same may be true for a heroine addict. The elasticity coefficient is zero because the quantity demanded does not respond to a change in price. This relationship is illustrated in Exhibit 2(b).

Goods for which $E_{\mathrm{D}}$ equals one $\left(E_{\mathrm{D}}=1\right)$ are said to have unit elastic demand. In this case, the quantity demanded changes proportionately to price changes. For example, a 10 percent increase in price will lead to a 10 percent reduction in quantity demanded. This relationship is illustrated in Exhibit 3 .

The price elasticity of demand is closely related to the slope of the demand curve.The flatter the demand curve passing through a given point, the more elastic the demand. The steeper the demand curve passing through a given point, the less elastic the demand. But elasticity is different than slope. The slope depends on the units of measurement we choose-like dollars or cents, or ounces or pounds. Using elasticities and measuring the relative percentage changes eliminates the unit problem. For example, a $5 \%$ change is a $5 \%$ change whether we are talking about pounds or ounces.

# 宏观经济学代写

## 经济代写|宏观经济学代考Macroeconomics代写|Is the Demand Curve Elastic or Inelastic?

$$E_{\mathrm{D}}=\frac{\% \Delta Q_{\mathrm{D}}}{\% \Delta P}=\frac{50 \%}{10 \%}=5$$

$$E_{\mathrm{D}}=\frac{\% \Delta Q_{\mathrm{D}}}{\% \Delta P}=\frac{1 \%}{10 \%}=0.10$$

## 经济代写|宏观经济学代考Macroeconomics代写|Types of Demand Curves

$E_{\mathrm{D}}$等于1 $\left(E_{\mathrm{D}}=1\right)$的商品被称为具有单位弹性需求。在这种情况下，需求量的变化与价格的变化成正比。例如，价格上涨10％将导致需求量减少10％。这种关系如表3所示。

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