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/ Chapter 5 - Elasticity / 5.1: Calculating Demand and Supply Elasticity 5.1: Calculating Demand and Supply Elasticity
ion 3
mplete
d out of
9
ion
Price:
Short-Term Demand
Price million units
Answer:
Check

Ask by Bradley Medina. in Canada
Mar 31,2025

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We need the demand quantity at the new price million units to calculate the demand elasticity.

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Beyond the Answer

Did you know that the concept of elasticity was introduced by the famous economist Alfred Marshall in the late 19th century? He developed the idea to measure how demand responds to changes in price, which allowed economists to analyze consumer behavior more effectively. This understanding has been critical in creating pricing strategies for businesses ever since!
In the real world, calculating elasticity helps businesses make informed decisions about pricing their products. For instance, if a company knows that their product is highly elastic, they might avoid raising prices too much, knowing that consumers might switch to a competitor. On the flip side, if demand is inelastic, they could increase prices without significantly reducing sales, maximizing revenue.

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