Chapter 5 is all about elasticity and how you apply to supply and demand respectively. In order to go in depth about how you use elasticity with demand, elasticity is a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants. When talking about demand, there are some general rules that apply, such as the availability of close substitutes, necessities v. luxuries, definition of the market, and the time horizon. Each one of these rules has different elasticities since they are all different levels of elastic price. The elasticity of demand also includes important formulas such as the midpoint method, total revenue, and income and cross-price elasticity. The general ideas of these applications can also be used for the elasticity of supply. Throughout the chapter, there were many graphs included that described and showed each of the situations and how it affected the curve. Overall, I would give the chapter a rating of 2 since it did thoroughly explain the applications of the formulas but it didn’t help to understand when faced to solve questions. I feel that it tried to mush all of the situations and terms into one chapter and I didn’t really understand it. Yet, they did do a good job of really trying to demonstrate the difference between supply and demand in regards of elasticity.
No comments:
Post a Comment