Notes for a freshmen college microeconomics course.

CHAPTER 20 DEMAND AND SUPPLY ELASTICITY I. Price Elasticity of Demand A. Concept of Price Elasticity The responsiveness or sensitivity of quantity demanded to a change in price. B. General Formula for Price Elasticity Percentage change in quantity demanded Percentage change in price C. Mid-Points Formula E/demand = D. Interpreting the Elasticity Coefficient A coefficient higher than 1 is elastic " " lower " 1 is inelastic " " exactly 1 is unitary A negative coefficient implies that a lower price results is lower …

…and B which yield the same level of total satisfaction to the consumer V. Indifference Map = A series of indifference curves, each showing a different level of total utility VI. Consumer Optimum = The point where the highest indifference curve is tangent to the budget line. VII. Income-Consumption Curve = The line connecting points of consumer optimum as income increases VIII. Price-Consumption Curve = The line connecting points of consumer optimum as the price of a good changes