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Chapter 3
Elasticity of Demand
Key Concept
Price elasticity measures how sensitive quantity demanded is to a change in price.
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When demand is elastic, a small price change leads to a change in quantity.
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The law of supply states that price and quantity move in the direction.
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Chapter 3
Elasticity of Demand
Key Concept
Price elasticity measures how sensitive quantity demanded is to a change in price.
When consumers have many alternatives, demand tends to be more elastic. This means even a small increase in price will cause buyers to switch to substitutes, reducing quantity demanded significantly.
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