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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Own-price elasticity of demand is our measure of how sensitive the quantity demanded is to changes in the price of a good or service, but what characteristics of a good or its market might be informative in determining whether demand is highly elastic or not? Perhaps the most important characteristic is whether there are close substitutes for the good in question.
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4.1. Own-Price Elasticity of Demand
to buy any of hers at a higher price. In this case, we would say that the demand curve facing a perfectly competitive seller is perfectly elastic . Exhibit 21. The Extremes of Price Elasticity <span>Own-price elasticity of demand is our measure of how sensitive the quantity demanded is to changes in the price of a good or service, but what characteristics of a good or its market might be informative in determining whether demand is highly elastic or not? Perhaps the most important characteristic is whether there are close substitutes for the good in question. If there are close substitutes for the good, then if its price rises even slightly, a consumer would tend to purchase much less of this good and switch to the substitute, which is now r


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