I have a pressing microeconomics question. Say that you have a market and the supply curve shifts left and the demand curve shifts right. Using JUST the initial equilibrium point and the new equilibrium point, can you calculate the price elasticity of demand? i have been struggling with this all day, as I know price elasticity of demand is measured along a demand curve. Or in this case can you use percentage change and get an answer? Thank you so much
Yes weird, I would think finding price elasticity of demand in these circumstances is problematic; price elasticity of demand is constructed ceteris paribus and there are lots of things moving around here. I think the intention would be to calculate the percentage changes from the two equilibrium points and calculate elasticity that way. I can’t think of what else to do. Though I wouldn’t agree that this is a good way to think about elasticities, or technically correct.
I have a pressing microeconomics question. Say that you have a market and the supply curve shifts left and the demand curve shifts right. Using JUST the initial equilibrium point and the new equilibrium point, can you calculate the price elasticity of demand? i have been struggling with this all day, as I know price elasticity of demand is measured along a demand curve. Or in this case can you use percentage change and get an answer? Thank you so much
Yes weird, I would think finding price elasticity of demand in these circumstances is problematic; price elasticity of demand is constructed ceteris paribus and there are lots of things moving around here. I think the intention would be to calculate the percentage changes from the two equilibrium points and calculate elasticity that way. I can’t think of what else to do. Though I wouldn’t agree that this is a good way to think about elasticities, or technically correct.