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Managerial Economics and Strategy, 2/e
book

Managerial Economics and Strategy, 2/e

by Jeffrey M. Perloff, James A. Brander
February 2016
Beginner to intermediate content levelBeginner to intermediate
500 pages
33h 40m
English
Pearson
Content preview from Managerial Economics and Strategy, 2/e

3.1 Elasticity

Managers commonly summarize the responsiveness of one variable—such as the quantity demanded—to a change in another—such as price—using a measure called an elasticity, which is the percentage change in one variable divided by the associated percentage change in the other variable. In particular, a manager can use the elasticity of demand to determine how the quantity demanded varies with price.

The Price Elasticity of Demand

In making critical decisions about pricing, a manager needs to know how a change in price affects the quantity sold. The price elasticity of demand (or simply the elasticity of demand or the demand elasticity) is the percentage change in quantity demanded, Q, divided by the percentage change in price, p. That ...

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Publisher Resources

ISBN: 9780134472553