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Charlotte Coleman
LVIE



Economics ­ Notes on Chapter 6

Elasticity

There are four main elasticities:

Price elasticity of demand: PED is a measure of responsiveness of the quantity of a
good or service demanded to changes in its price.








An infinite elasticity demand curve would be a direct horizontal line,…

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Charlotte Coleman
LVIE



It depends on whether the god is normal or inferior; (negative for inferior, positive for
normal). This is because demand for a normal good increases with an increase of income,
whereas and increase in income decreases the demand for an inferior good.



cross-elasticity of demand: measures how…

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Charlotte Coleman
LVIE

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