# Principles of Microeconomics

## Elasticity

The concept of elasticity is an important one in economics, both for businesses and policymakers. The basic idea behind the concept of elasticity is simple: it is a measure of how responsive economic agents are to changes in economic conditions. That is, instead of simply determining whether prices and quantities rise or fall in response to an environmental change, the concept of elasticity is focused on determining “how much” prices and quantities rise or fall when economic conditions change. The Pencasts for this topic illustrate the following: how to compute various elasticities of demand and supply, how the elasticity of demand is related to the amount of revenue firms received (equivalently the amount spent by consumers), and how the elasticities of demand and supply impact changes in equilibrium.

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## Computing Price Elasticity of DemandThis Pencast shows students how to compute the price elasticity of demand using an applied problem. |

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## Computing Income Elasticity of DemandThis Pencast shows how to compute the income elasticity of demand using an applied problem. |

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## Computing Cross-Price Elasticity of DemandThis Pencast shows how to compute the cross-price elasticity of demand using an applied problem. |

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## Computing Price Elasticity of SupplyThis Pencast shows how to compute the price elasticity of supply using an applied problem. |

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## Price Effects, Quantity Effects, and Total RevenueThis Pencast illustrates how a decrease in the price of a good creates price and quantity effects. In addition, it shows how these competing effects alter the revenue received by firms (or spending by consumers). |

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## Elasticity and Total RevenueThis Pencast illustrates how a decrease in the price of a good affects the revenue received by firms when the fact a relatively elastic demand curve and a relatively inelastic demand curve. The Pencast shows students when a decrease in the price of a good results in more and less revenue for firms. |

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## Elasticity and Changes in EquilibriumThis Pencast illustrates the effect of a decrease in supply (a leftward shift) on the equilibrium price and quantity of two goods, one that has a relatively elastic demand and another that has a relatively inelastic demand. The Pencast identifies the situation that has the relatively larger change in price and the relatively larger change in quantity. |