[F4 Econ] Demand Elasticity

Nidoq

1)Demand Elasticity / Supply Elasticty 其實可以show到咩？
inelastic同elastic之類有什麼意思？
eg.If a good is (rather) elastic/inelastic 是什麼意思？

2)可不可以解釋一下一件貨多或少Substitute影響Deman elasticity 的理由/道理？

zubat

Demand elasticity shows the responsiveness of consumers to a price change in terms of quantity demanded.
Supply elasticity shows the responsiveness of producers to a price change in terms of quantity supplied.

You should never say "a good is elastic/inelastic". Only demand and supply can be described in terms of elasticity.
Inelastic demand / supply means that the percentage change in price is greater than the percentage change in quantity. (People are less responsive to a price change.) Its numerical value is smaller than 1.
Elastic demand / supply means that the percentage change in price is smaller than the percentage change in quantity. (People are more responsive to a price change.) Its numerical value is greater than 1.


A good (e.g. newspaper) having many substitutes tends to have a more elastic demand. Many substitutes mean keen competition. This is because if there is an increase in the price of Apple Daily, people can switch to any of the other newspapers, which are close substitutes of it, such as Ming Pao. This is supported by the law of demand. Therefore, even if the price change is small, the change in quantity demanded will be great.

On the other hand, a good having few substitutes tends to have a more inelastic demand. For example, the demand for water in Hong Kong is very inelastic as the Water Supplies Department is the only supplier (i.e. monopoly). Even if the water bill is charged higher, you can hardly find a substitute to replace it. As a result, the change in quantity demanded in response to the price change is small.

Other factors affecting elasticity of demand include proportion of income spent on the good, degree of necessity, habit of consumption, durability, number of uses and length of adjustment period (which is in fact the second law of demand covered in AL syllabus).

Royal

順便問埋…而家有昂坪360，如果多左一條巴士路線係可以代替昂坪360
咁昂坪360既Demand跌定Ed tends to be elastic?
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需求彈性卅供給彈性其實都幾重要，
除左會簡單考計數，問你某種factor會點影響Ed/Es之外，
亦可以問某種good加左價之後，佢既總收入會升定跌(總收入=/=總盈利，仲要睇下成本）
到之後更可以利用Ed同Es既比較，分析tax既burden 或者 subsidy邊個會得益多d

所以比心機吧^^

Nidoq

原帖由 Royal 於 16/2/2008 12:05 PM 發表

                               
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順便問埋…而家有昂坪360，如果多左一條巴士路線係可以代替昂坪360
咁昂坪360既Demand跌定Ed tends to be elastic?

嘗試作答,有錯請指教

360 Demand:
如果巴士價比360大 360的Demand不變
如果巴士價比360小 360的Demand decrease

因它們是competitive demand關係

Ed變得elastic
因為no. of Substitute increase

Royal

原帖由 Nidoq 於 16/2/2008 05:33 PM 發表

                               
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嘗試作答,有錯請指教

360 Demand:
如果巴士價比360大 360的Demand不變
如果巴士價比360小 360的Demand decrease

因它們是competitive demand關係

Ed變得elastic
因為no. of Substitute increas ...

其實根據Opportunity Cost既觀念，consumer唔會淨係根據價格而判斷
簡單而言，如果再加入一個factor : 時間
假設等+坐巴士係5分鐘，但係等+坐360要60分鐘(即1小時)
但係巴士要$50，360只係$5
如果一個每小時可以賺5000蚊既人，同一個每小時賺到$1既人，
佢地分別係會選擇唔同既交通工具。(假設巴士同360其他性質完全一樣)

富人(坐巴士): $50 + $5000*(5/60) = $466.7
　　(坐360): $5 + $5000 = $5005
窮人(坐巴士): $50 + $1(5/60) = $50.1
　　(坐360): $5 + $1 = $6
明顯富人會選擇坐巴士，而窮人會選擇坐360。(其實呢題係某年MC既翻版)

所以我覺得360 demand係會decrease。
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呢條係我某次exam既題目，我就係又跌demand又轉Ed搞到冇左分
正確答案係唔駛轉Ed, 有冇人可以解釋比我聽點解?.?

zubat

原帖由 Royal 於 17/2/2008 12:57 PM 發表

                               
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其實根據Opportunity Cost既觀念，consumer唔會淨係根據價格而判斷
簡單而言，如果再加入一個factor : 時間
假設等+坐巴士係5分鐘，但係等+坐360要60分鐘(即1小時)
但係巴士要$50，360只係$5
如果一個每小時可 ...

Demand for 360 cable car will decrease because there must be a certain number of people swiching to take buses instead.
It is not reasonable if a new bus line is opened but no one takes it.

However, the elasticity of demand of 360 cable car should also decrease.
Refer to the following diagram. This is the classification of elasticity of demand on a demand curve.

                               
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Then refer to the following diagram.

                               
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As explained before, the demand for 360 cable car decreases from D1 to D2.
The supply is fixed and so is perfectly inelastic at Q1.
The price is also fixed at P.
The quantity transacted decreases from Q1 to Q2, resulting in a surplus (Q1-Q2).
With a fall in demand and unchanged price, the price reaches a higher portion of the demand curve, which means more elastic.
Therefore, the elasticity of demand should increase.

Try to check with your teacher. See if my explanation is correct.

Royal

原帖由 zubat 於 17/2/2008 02:58 PM 發表

                               
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Demand for 360 cable car will decrease because there must be a certain number of people swiching to take buses instead.
It is not reasonable if a new bus line is opened but no one takes it.

Howe ...

哦!!! 我明啦! 因為我畫果時轉埋個slope of demand curve-3-"

zubat

原帖由 Royal 於 17/2/2008 05:22 PM 發表

                               
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哦!!! 我明啦! 因為我畫果時轉埋個slope of demand curve-3-"

Yea...
Elasticity of demand is NOT equal / in proportion to the slope of demand curve.
This misconception will be pointed out with emphasis in AL syllabus with proof.