Talk:Price elasticity of demand

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Contents 1 This article is a disaster 2 The Usual Formulas for Consumer Demand Elasticities 3 Some questions by various editors 4 Economics 5 Total revenue test 6 Giffen and Veblen goods 7 Reorganization

[edit] This article is a disaster

The initial paragraphs of this article are nearaaly impenetrable—it's as if the person who wrote it deliberately wanted to make a simple concept obscure.

I have no beef with the mathematical section of the article, which is technical enough for whomsoever wants it. But why oh why is the initial section so obscure? Paul Samuelson would not approve. --TallulahBelle 14:48, 19 May 2007 (UTC)

This is a total mess. I agree. The technical section is poor quality, too. The definition of elasticity from derivatives is simple enough, but in terms of percent changes there are a host of rules. This stuff probably belongs in the elasticity article rather than here, as they are problems that all elasticity computations based on real data suffer.

The article should ALSO include a description of Hick's Laws on Demand Elasticity. This would provide a much better framework for discussion than the current narrative. However, this would inevitably bring in income and cross price elasticities, which for some reason have been separated from the discussion. Coleca 20:57, 19 May 2007 (UTC)

[edit] The Usual Formulas for Consumer Demand Elasticities

Have the usual laws, such as Cournot Aggregation, "Adding Up Rule", Homogeneity, Slutsky Equation, and symmetry been written about elsewhere? I would have expected them to be included on an article about demand elasticity....

In fact, why do we have several separate articles on elasticity, price elasticity, cross price elasticity, and income elasticity? Given the similarlity of definitions, and that the concepts are mathematically linked by the above formulas in consumer theory, it would seem to make more sense to discuss them together. Certainly, their ties to one another should be explained. Coleca 12:21, 18 May 2007 (UTC)

[edit] Some questions by various editors

Why include percentage in the definition? Percentage is just a way of expressing of a number as a fraction of 100. Since it is a fraction the factors 100 cancel. I would suggest relative change.

What determines the elasticity of demand for a good or service?

The way Ed has been defined makes it a negative number.

So strictly you should either compare Ed to -1, or talk about abs(Ed).

Can I get some exam questions on Demand and Supply and Elasticity

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This article needs references.

[edit] Economics

Explain the implicaion of a curved deman schedule on the elasticity of demand196.44.102.241 12:10, 8 December 2006 (UTC)

Often a straight line is used to display demand, but that is incorrect. Think about it practically, if the price is originally $10, if you decrease it by $5, demand might double at the bargain. But if it is decreased down to only $1, demand would increase more than 80%, it would become huge. Imagine if mac cut their prices down to $10, the would be sold out in a day or two. The opposite is also true, that as price increases, demand decreases less each time, because there tends to be a couple of wealthy aristocrats who still want to buy the product. Once again, with the mac example, there's probably at least one millionare out there, who is a mac addict, who would still buy the laptop at $100,000. Because of these relationships, the graph has a curve. Hope that makes sense... (Bonzai273 (talk) 10:05, 29 May 2008 (UTC))

And please don't capitalize titles, thanks (Bonzai273 (talk) 10:08, 29 May 2008 (UTC))

[edit] Total revenue test

I'm a little bit confused about this. Let's take a good at an equilibrium where it's unit elastic (elasticity=1). Let's say we sell 200 oranges for 10 $ each. We cut the price to 5$ (-50%) and sales go up to 300 (+50%) oranges. So at this point the good is clearly unit elastic. But if we look at our revenue, it has changed. The revenue was 200*10=2000 before but is now only 5*300=1500. So I don't understand how you can say that at unit elasticity "the total revenue remains unchanged". Please explain this to me? //Anonymous

When the price is halved, the sales don't go up by 50%, they double. Also, when prices are doubled, quantity demanded is halved. 121.45.194.43 11:45, 4 October 2007 (UTC)

But then %change of QD/% change of P is equal to 4... that's not unit elastic. (Bonzai273 (talk) 10:11, 29 May 2008 (UTC))

[edit] Giffen and Veblen goods

It seems to me that the discussion of Veblen and Giffen goods has no business in this article. They're related more closely to income and cross price elasticities of demand, which this article notably neglects to mention. That part should be deleted or moved to a more appropriate article, and preferable modified to reflect the lack of empirical support for the existence of these goods in the first place.

[edit] Reorganization

The mathematical definition is simple and contains everything you need to know about the topic. The rest is just idle chatter. Move the mathematical definition to the top.