Price Elasticity
amount of quantity decreases but just a little
Elasticity- respond the purpose in the
movement of supply and demand
- How people respond to the changes in
the market
(if the price of a price is high, people tends to
buy less and if the price of product is low,
people will buy more and that is the las of
demand. But how much more or how much less
did they buy and thats the idea of elasticity, it is
driven by a change in price)
Price Elasticity- measures of the responsive of a
quantity of a product demand by consumers
- What degree does the demand will fall?
(normally, substantially, or
tremendously)
- What degree does the supply will rise?
(this measures how sensitive the customers will
be to a price change. It is the measure of
sensitivity to the price) if tell you that the price
is gone up by 10 pesos, this will be the absolute
change, is it a big change or a small change?
Well, it depends. What is the product?
Elastic Demand
- Product demand by which price change
cause relatively large changes in
quantity demanded.
(if a demand is elastic, the quantity is sensitive
to a change in price.) a little change in price
brings a bigger change in demand. This means
that the product has many substitutes
Inelastic Demand
- Product demand for which price
changes cause relatively smaller
changes in quantity demanded
(if there an increase in price gasoline, the
bit. If the demand is inelastic, the quantity is
insensitive to a change in price. So if the price
goes down, you buy a little bit more and if the
price goes up, you buy a little bit less.
Insensitive to a change in price The reason for
this is because this is a need and there are only
a few substitutes. Like in gasoline, you dont
have any substitute to run the engine of your
car unless its gasoline.)
Unit Elasticity
- Product demand for which relatively
price changes in quantity demand are
equal.
Price elasticity of Supply
- A measure of the responsiveness of a
quantity of a product supply by seller
when the product price changes.
(a sensitivity of quantity supply if there is a
change in price. If the price goes up, the
producers tend to produce more products
and if the price goes down, the producers
find it hard to produce product.)
Income Elasticity Demand
- A measure of the responsiveness of a
quantity of a product demanded to
changes in consumer income
- Increase in demand because on
increase in income.
- How many percent does the higher
income man purchased the produce
-
Cross Elasticity Demand
 - Kapag tumaas ang demand ng isang it that is an externality and also if she doesnt
product, bababa ang ibang related like it that is also an externality.
goods.
Smoking- passive smoking/ second hand smoke
( the prooducts are substitutes if the price
of one product increases, and the demand Vaccines- prevent spreading of diseases
to other product increases (snickers vs
butterfinger) (the products are compliment
if the price of one product increases but the
demand for other product decreases (like
the hotdog bun and the hotdog)

Public goods and Externalities

Private Goods- Goods you bought for your own

good.

- Goods that people individually buy and

consume and keep people who do not
pay from receiving the benefits.

Excludability if you buy a good, other person

cant consume it

Rivalry if you buy and consume a good, it will

not be available to others.

Public goods goods that everyone

silmutaneously buy consume and from wlc no
one can be excluded if they dont pay.

Non-exclusion theres no way to exclude

people from enjoying it

Shared consumption everybody can it like the

street lights.

Ex. Bridges, highways, lamp post

Externalities- occurs when some of the cost of

the benefits of the goods (spill over costs and
benefits)

(if you buy an perfume and you spray it in you

and someone smells it and she like the smell of