Lecture Slide for Chapter 5: Elasticity and Its Application (N. Gregory Mankiw's Principles of Economics Textbook)

Principles of Economics, Ninth
Edition
N. Gregory Mankiw




PowerPoint Slides prepared by:
V. Andreea CHIRITESCU
Eastern Illinois University




N. Gregory Mankiw, Principles of Economics, 9th Edition © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in 1
part.

, Chapter 5

Elasticity and Its Application




N. Gregory Mankiw, Principles of Economics, 9th Edition © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in 2
part.

, The Elasticity of Demand, Part 1
• Elasticity
– Measure of the responsiveness of quantity
demanded or quantity supplied
• To a change in one of its determinants
• Price elasticity of demand
– How much the quantity demanded of a
good responds to a change in the price of
that good


N. Gregory Mankiw, Principles of Economics, 9th Edition © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,3in whole or in
part.

, The Elasticity of Demand, Part 2
• Price elasticity of demand
– Percentage change in quantity demanded
divided by the percentage change in price
• Elastic demand
– Quantity demanded responds
substantially to changes in price
• Inelastic demand
– Quantity demanded responds only slightly
to changes in price
N. Gregory Mankiw, Principles of Economics, 9th Edition © 2021 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,4in whole or in
part.