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Ch 12: Price Determination & Elasticity

About This Chapter

View the lessons in this chapter to master pricing strategies and concepts in the business world. Learn the meaning of elasticity and its effect on supply, demand and income in microeconomics.

Price Determination and Elasticity - Chapter Summary

Our instructors will introduce you to the concepts of pricing in microeconomics. Learn to define price ceilings and floors. Expand your knowledge of supply, demand, and pricing as you view examples of government intervention and market conditions. Discover their effects and determine which ones are legitimate tools and which ones are illegal.

You'll also be introduced to the concept of elasticity. Learn the definitions of price elasticity of both supply and demand as well as their formulas and how to identify examples of elastic and inelastic products. You'll also use the income elasticity of demand formula and learn why income sometimes affects demand. After completing the lessons in this chapter, you should be able to:

  • Define price ceilings and floors and show how they affect equilibrium
  • Explain how government intervention and market conditions affect supply, demand and price
  • Discuss and demonstrate price elasticity in supply and demand formulas and concepts
  • Define income elasticity and understand the formula

Our lessons are designed to help you learn faster and retain the knowledge longer. Short, engaging video segments are taught by experienced instructors and feature video tags for quick and easy topic review. The transcript of the lesson is right there below the video, and key terms are often links to definitions and examples. So no matter how you learn, all the information you need is provided. And if you have questions as you study, subject experts are just an email away. After you complete each lesson, take the optional quiz to see what you have learned!

6 Lessons in Chapter 12: Price Determination & Elasticity
Test your knowledge with a 30-question chapter practice test
Price Ceilings and Price Floors in Microeconomics

1. Price Ceilings and Price Floors in Microeconomics

Governments can restrict prices from going too low or too high through use of price ceilings. This lesson explains these concepts, as well as problems that can arise from their use.

Controlling Supply: Government Intervention & Market Forces

2. Controlling Supply: Government Intervention & Market Forces

Sometimes, despite the best efforts of the market, a heavy hand is needed to control supply. This lesson looks at how the government and the market can work to do just that.

Price Elasticity of Demand in Microeconomics

3. Price Elasticity of Demand in Microeconomics

Discover the definition and formula for price elasticity of demand. See some real-world examples of how it is calculated, and find out what it means for demand of a good to be inelastic or elastic.

Cross Price Elasticity of Demand: Definition and Formula

4. Cross Price Elasticity of Demand: Definition and Formula

Learn what cross price elasticity of demand means. Find out why business owners and economists like to know cross price elasticity, and discover how to calculate it. See some everyday examples.

Income Elasticity of Demand in Microeconomics

5. Income Elasticity of Demand in Microeconomics

The income elasticity of demand is a useful tool that measures what happens to consumer demand for products and services when incomes change. We will work through the formula and interpret what the answers mean.

Price Elasticity of Supply in Microeconomics

6. Price Elasticity of Supply in Microeconomics

Price is an importance concept in economics, as it is the meeting point of supply and demand. This lesson explains some of the issues with elasticity of price with respect to supply, along with some real-world examples.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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