{"id":156,"date":"2018-04-05T01:05:25","date_gmt":"2018-04-05T01:05:25","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/os-macroecon-e2\/chapter\/price-elasticity-of-demand-and-price-elasticity-of-supply\/"},"modified":"2018-06-20T13:37:02","modified_gmt":"2018-06-20T13:37:02","slug":"price-elasticity-of-demand-and-price-elasticity-of-supply","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/chapter\/price-elasticity-of-demand-and-price-elasticity-of-supply\/","title":{"raw":"Price Elasticity of Demand and Price Elasticity of Supply","rendered":"Price Elasticity of Demand and Price Elasticity of Supply"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Objectives<\/h3>\r\nBy the end of this section, you will be able to:\r\n<ul>\r\n \t<li>Calculate the price elasticity of demand<\/li>\r\n \t<li>Calculate the price elasticity of supply<\/li>\r\n<\/ul>\r\n<\/div>\r\n<p id=\"delete_me\">Both the demand and supply curve show the relationship between price and the number of units demanded or supplied. <strong>Price elasticity<\/strong> is the ratio between the percentage change in the quantity demanded (Qd) or supplied (Qs) and the corresponding percent change in price. The <strong>price elasticity of demand<\/strong> is the percentage change in the quantity <em>demanded<\/em> of a good or service divided by the percentage change in the price. The <strong>price elasticity of supply<\/strong> is the percentage change in quantity <em>supplied<\/em> divided by the percentage change in price.<\/p>\r\n<p id=\"fs-idp21961264\">We can usefully divide elasticities into three broad categories: elastic, inelastic, and unitary. An <strong>elastic demand<\/strong> or <strong>elastic supply<\/strong> is one in which the elasticity is greater than one, indicating a high responsiveness to changes in price. Elasticities that are less than one indicate low responsiveness to price changes and correspond to<strong> inelastic demand<\/strong> or <strong>inelastic supply<\/strong>. <strong>Unitary elasticities<\/strong> indicate proportional responsiveness of either demand or supply, as <a class=\"autogenerated-content\" href=\"#Table_05_01\">[link]<\/a> summarizes.<\/p>\r\n\r\n<table id=\"Table_05_01\" summary=\"If percentage change in quantity is greater than percentage change in price then percentage change in quantity divided by percentage change in price is greater than 1, and it is called \"><caption>Elastic, Inelastic, and Unitary: Three Cases of Elasticity<\/caption>\r\n<thead>\r\n<tr>\r\n<th>If . . .<\/th>\r\n<th>Then . . .<\/th>\r\n<th>And It Is Called . . .<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>[latex]\\text{% change in quantity}&gt;\\text{% change in price}[\/latex]<\/td>\r\n<td>[latex]\\frac{\\text{% change in quantity}}{\\text{% change in price}}&gt;1[\/latex]<\/td>\r\n<td>Elastic<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>[latex]2\\pi r[\/latex]<\/td>\r\n<td>[latex]\\pi {r}^{2}[\/latex]<\/td>\r\n<td>Unitary<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>[latex]\\text{% change in quantity}&lt;\\text{% change in price}[\/latex]<\/td>\r\n<td>[latex]\\frac{\\text{% change in quantity}}{\\text{% change in price}}&lt;1[\/latex]<\/td>\r\n<td>Inelastic<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<div id=\"fs-idm4388720\" class=\"economics linkup\">\r\n<div class=\"textbox shaded\">\r\n<p id=\"fs-idm132352\">Before we delve into the details of elasticity, enjoy this <a href=\"http:\/\/openstaxcollege.org\/l\/Super_Bowl\">article<\/a> on elasticity and ticket prices at the Super Bowl.<\/p>\r\n<span id=\"fs-idm17236384\">\r\n<img class=\"aligncenter\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/3164\/2018\/04\/05001816\/Super_Bowl.png\" alt=\"QR Code representing a URL\" width=\"130\" \/><\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<p id=\"fs-idm47543904\">To calculate elasticity along a demand or supply curve economists use the average percent change in both quantity and price. This is called the Midpoint Method for Elasticity, and is represented in the following equations:<\/p>\r\n\r\n<div id=\"eip-919\">[latex]\\begin{array}{rcl}\\text{% change in quantity}&amp; =&amp; \\frac{{\\mathrm{Q}}_{2}-{\\mathrm{Q}}_{1}}{\\left({\\mathrm{Q}}_{2}+{\\mathrm{Q}}_{1}\\right)\/2} \\times 100\\\\ \\text{% change in price}&amp; =&amp; \\frac{{\\mathrm{P}}_{2}-{\\mathrm{P}}_{1}}{\\left({\\mathrm{P}}_{2}+{\\mathrm{P}}_{1}\\right)\/2} \\times 100\\end{array}[\/latex]<\/div>\r\n<p id=\"fs-idm24209232\">The advantage of the <span class=\"no-emphasis\">Midpoint Method<\/span> is that one obtains the same elasticity between two price points whether there is a price increase or decrease. This is because the formula uses the same base (average quantity and average price) for both cases.<\/p>\r\n\r\n<section id=\"fs-idm7067040\">\r\n<h3>Calculating Price Elasticity of Demand<\/h3>\r\n<p id=\"fs-idm52866832\">Let\u2019s calculate the elasticity between points A and B and between points G and H as <a class=\"autogenerated-content\" href=\"#CNX_Econ_C05_003\">[link]<\/a> shows.<\/p>\r\n\r\n<figure id=\"CNX_Econ_C05_003\">\r\n\r\n[caption id=\"\" align=\"aligncenter\" width=\"585\"]<img src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/3164\/2018\/04\/05001819\/CNX_Econ_C05_003.jpg\" alt=\"The graph shows a downward sloping line that represents the price elasticity of demand.\" width=\"585\" height=\"378\" \/> <strong>Figure 5.2 Calculating the Price Elasticity of Demand<\/strong> We calculate the price elasticity of demand as the percentage change in quantity divided by the percentage change in price.[\/caption]<\/figure>\r\n<p id=\"fs-idm8831936\">First, apply the formula to calculate the elasticity as price decreases from $70 at point B to $60 at point A:<\/p>\r\n\r\n<div id=\"eip-188\">[latex]\\begin{array}{rcl}\\text{% change in quantity}&amp; =&amp; \\frac{3,000 - 2,800}{\\left(3,000+2,800\\right)\/2} \\times 100\\\\ &amp; =&amp; \\frac{200}{2,900} \\times 100\\\\ &amp; =&amp; 6.9\\\\ \\text{% change in price}&amp; =&amp; \\frac{60 - 70}{\\left(60+70\\right)\/2} \\times 100\\\\ &amp; =&amp; \\frac{-10}{65} \\times 100\\\\ &amp; =&amp; -15.4\\\\ \\text{Price Elasticity of Demand}&amp; =&amp; \\frac{ 6.9%}{-15.4%}\\\\ &amp; =&amp; 0.45\\end{array}[\/latex]<\/div>\r\n<p id=\"fs-idm46864880\">Therefore, the elasticity of demand between these two points is [latex]\\frac{ 6.9%}{-15.4%}[\/latex] which is 0.45, an amount smaller than one, showing that the demand is inelastic in this interval. Price elasticities of demand are <em>always<\/em> negative since price and quantity demanded always move in opposite directions (on the demand curve). By convention, we always talk about elasticities as positive numbers. Mathematically, we take the absolute value of the result. We will ignore this detail from now on, while remembering to interpret elasticities as positive numbers.<\/p>\r\n<p id=\"fs-idm10131488\">This means that, along the demand curve between point B and A, if the price changes by 1%, the quantity demanded will change by 0.45%. A change in the price will result in a smaller percentage change in the quantity demanded. For example, a 10% <em>increase<\/em> in the price will result in only a 4.5% <em>decrease<\/em> in quantity demanded. A 10% <em>decrease<\/em> in the price will result in only a 4.5% <em>increase<\/em> in the quantity demanded. Price elasticities of demand are negative numbers indicating that the demand curve is downward sloping, but we read them as absolute values. The following Work It Out feature will walk you through calculating the price elasticity of demand.<\/p>\r\n\r\n<div class=\"textbox shaded\">\r\n<h3><span style=\"color: #000000;font-size: 1.2em;font-weight: 600;text-align: center\">work it out<\/span><\/h3>\r\n<span style=\"color: #6c64ad;font-size: 0.9em;font-weight: 600\">Finding the Price Elasticity of Demand<\/span>\r\n\r\n<span style=\"font-size: 1rem;text-align: initial\">Calculate the price elasticity of demand using the data in <\/span><a class=\"autogenerated-content\" style=\"font-size: 1rem;text-align: initial\" href=\"#CNX_Econ_C05_003\">[link]<\/a><span style=\"font-size: 1rem;text-align: initial\"> for an increase in price from G to H. Has the elasticity increased or decreased?<\/span>\r\n\r\n<span style=\"font-size: 1rem;text-align: initial\">Step 1. We know that:<\/span>\r\n\r\n<span style=\"font-size: 0.9em\">[latex]\\begin{array}{rcl}\\text{Price Elasticity of Demand}&amp; =&amp; \\frac{\\text{% change in quantity}}{\\text{% change in price}}\\end{array}[\/latex]<\/span>\r\n\r\n<span style=\"font-size: 1rem;text-align: initial\">Step 2. From the <\/span><span class=\"no-emphasis\" style=\"font-size: 1rem;text-align: initial\">Midpoint Formula<\/span><span style=\"font-size: 1rem;text-align: initial\"> we know that:<\/span>\r\n\r\n<span style=\"font-size: 0.9em\">[latex]\\begin{array}{rcl} \\text{change in quantity}&amp; =&amp; \\frac{{\\text{Q}}_{2}-{\\text{Q}}_{1}}{\\left({\\text{Q}}_{2}+{\\text{Q}}_{1}\\right)\/2} \\times 100\\\\ \\text{change in price}&amp; =&amp; \\frac{{\\text{P}}_{2}-{\\text{P}}_{1}}{\\left({\\text{P}}_{2}+{\\text{P}}_{1}\\right)\/2} \\times 100\\end{array}[\/latex]<\/span>\r\n\r\n<span style=\"font-size: 1rem;text-align: initial\">Step 3. So we can use the values provided in the figure in each equation:<\/span>\r\n\r\n<span style=\"font-size: 0.9em\">[latex]\\begin{array}{rcl}\\text{% change in quantity}&amp; =&amp; \\frac{1,600 - 1,800}{\\left(1,600+1,800\\right)\/2} \\times 100\\\\ &amp; =&amp; \\frac{-200}{1,700} \\times 100\\\\ &amp; =&amp; -11.76\\\\ \\text{% change in price}&amp; =&amp; \\frac{130 - 120}{\\left(130+120\\right)\/2} \\times 100\\\\ &amp; =&amp; \\frac{10}{125} \\times 100\\\\ &amp; =&amp; 8.0\\end{array}[\/latex]<\/span>\r\n\r\n<span style=\"font-size: 1rem;text-align: initial\">Step 4. Then, we can use those values to determine the price elasticity of demand:<\/span>\r\n\r\n<span style=\"font-size: 0.9em\">[latex]\\begin{array}{rcl}\\text{Price Elasticity of Demand}&amp; =&amp; \\frac{\\text{% change in quantity}}{\\text{% change in price}}\\\\ &amp; =&amp; \\frac{-11.76}{8}\\\\ &amp; =&amp; 1.47\\end{array}[\/latex]<\/span>\r\n\r\n<span style=\"font-size: 1rem;text-align: initial\">Therefore, the elasticity of demand from G to is H 1.47. The magnitude of the elasticity has increased (in absolute value) as we moved up along the <\/span><span class=\"no-emphasis\" style=\"font-size: 1rem;text-align: initial\">demand curve<\/span><span style=\"font-size: 1rem;text-align: initial\"> from points A to B. Recall that the elasticity between these two points was 0.45. Demand was inelastic between points A and B and elastic between points G and H. This shows us that price elasticity of demand changes at different points along a <\/span><span class=\"no-emphasis\" style=\"font-size: 1rem;text-align: initial\">straight-line demand curve<\/span><span style=\"font-size: 1rem;text-align: initial\">.<\/span>\r\n\r\n<\/div>\r\n<\/section><section id=\"fs-idp9020112\">\r\n<h3>Calculating the Price Elasticity of Supply<\/h3>\r\n<p id=\"fs-idp11618672\">Assume that an apartment rents for $650 per month and at that price the landlord rents 10,000 units are rented as <a class=\"autogenerated-content\" href=\"#CNX_Econ_C05_023\">[link]<\/a> shows. When the price increases to $700 per month, the landlord supplies 13,000 units into the market. By what percentage does apartment supply increase? What is the price sensitivity?<\/p>\r\n\r\n<figure id=\"CNX_Econ_C05_023\"><figcaption><\/figcaption>\r\n\r\n[caption id=\"\" align=\"aligncenter\" width=\"390\"]<img src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/3164\/2018\/04\/05001822\/CNX_Econ_C05_023.jpg\" alt=\"The graph shows an upward sloping line that represents the supply of apartment rentals.\" width=\"390\" height=\"316\" \/> <strong>Figure 5.3 Price Elasticity of Supply<\/strong> We calculate the price elasticity of supply as the percentage change in quantity divided by the percentage change in price.[\/caption]<\/figure>\r\n<p id=\"eip-939\">Using the <span class=\"no-emphasis\">Midpoint Method<\/span>,<\/p>\r\n\r\n<div id=\"eip-883\">[latex]\\begin{array}{rcl}\\text{% change in quantity}&amp; =&amp; \\frac{13,000 - 10,000}{\\left(13,000+10,000\\right)\/2} \\times 100\\\\ &amp; =&amp; \\frac{3,000}{11,500} \\times 100\\\\ &amp; =&amp; 26.1\\\\ \\text{% change in price}&amp; =&amp; \\frac{$700-$650}{\\left($700+$650\\right)\/2} \\times 100\\\\ &amp; =&amp; \\frac{50}{675} \\times 100\\\\ &amp; =&amp; 7.4\\\\ \\text{Price Elasticity of Supply}&amp; =&amp; \\frac{26.1%}{ 7.4%}\\\\ &amp; =&amp; 3.53\\end{array}[\/latex]<\/div>\r\n<p id=\"fs-idm28012240\">Again, as with the elasticity of demand, the elasticity of supply is not followed by any units. Elasticity is a ratio of one percentage change to another percentage change\u2014nothing more\u2014and we read it as an absolute value. In this case, a 1% rise in price causes an increase in quantity supplied of 3.5%. The greater than one elasticity of supply means that the percentage change in quantity supplied will be greater than a one percent price change. If you're starting to wonder if the concept of slope fits into this calculation, read the following Clear It Up box.<\/p>\r\n\r\n<div id=\"fs-idm35334384\" class=\"economics clearup\">\r\n<div class=\"textbox examples\">\r\n<h3>clear it up<\/h3>\r\n<section id=\"fs-idp9020112\">\r\n<div id=\"fs-idm35334384\" class=\"economics clearup\">\r\n<h4>Is the elasticity the slope?<\/h4>\r\n<p id=\"fs-idm9625696\">It is a common mistake to confuse the slope of either the supply or demand curve with its elasticity. The slope is the rate of change in units along the curve, or the rise\/run (change in y over the change in x). For example, in <a class=\"autogenerated-content\" href=\"#CNX_Econ_C05_003\">[link]<\/a>, at each point shown on the demand curve, price drops by $10 and the number of units demanded increases by 200 compared to the point to its left. The slope is \u201310\/200 along the entire demand curve and does not change. The price elasticity, however, changes along the curve. Elasticity between points A and B was 0.45 and increased to 1.47 between points G and H. Elasticity is the <em>percentage<\/em> change, which is a different calculation from the slope and has a different meaning.<\/p>\r\n<p id=\"eip-88\">When we are at the upper end of a demand curve, where price is high and the quantity demanded is low, a small change in the quantity demanded, even in, say, one unit, is pretty big in percentage terms. A change in price of, say, a dollar, is going to be much less important in percentage terms than it would have been at the bottom of the demand curve. Likewise, at the bottom of the demand curve, that one unit change when the quantity demanded is high will be small as a percentage.<\/p>\r\n<p id=\"eip-927\">Thus, at one end of the demand curve, where we have a large percentage change in quantity demanded over a small percentage change in price, the elasticity value would be high, or demand would be relatively elastic. Even with the same change in the price and the same change in the quantity demanded, at the other end of the demand curve the quantity is much higher, and the price is much lower, so the percentage change in quantity demanded is smaller and the percentage change in price is much higher. That means at the bottom of the curve we'd have a small numerator over a large denominator, so the elasticity measure would be much lower, or inelastic.<\/p>\r\n<p id=\"eip-326\">As we move along the demand curve, the values for quantity and price go up or down, depending on which way we are moving, so the percentages for, say, a $1 difference in price or a one unit difference in quantity, will change as well, which means the ratios of those percentages and hence the elasticity will change.<\/p>\r\n\r\n<\/div>\r\n<\/section><\/div>\r\n<div class=\"textbox key-takeaways\">\r\n<h3>Key Concepts and Summary<\/h3>\r\n<section id=\"fs-idp17381808\" class=\"summary\">\r\n<ul>\r\n \t<li id=\"fs-idp10316160\">Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. We compute it as the percentage change in quantity demanded (or supplied) divided by the percentage change in price. We can describe elasticity as elastic (or very responsive), unit elastic, or inelastic (not very responsive). Elastic demand or supply curves indicate that quantity demanded or supplied respond to price changes in a greater than proportional manner. An inelastic demand or supply curve is one where a given percentage change in price will cause a smaller percentage change in quantity demanded or supplied. A unitary elasticity means that a given percentage change in price leads to an equal percentage change in quantity demanded or supplied.<\/li>\r\n<\/ul>\r\n<\/section><\/div>\r\n<div class=\"textbox exercises\">\r\n<h3>Self-Check Questions<\/h3>\r\n<section id=\"fs-idp16124064\" class=\"self-check-questions\">\r\n<div id=\"fs-idp16086976\">\r\n<div id=\"fs-idp13810096\">\r\n<p id=\"fs-idp20371552\">From the data in <a class=\"autogenerated-content\" href=\"#Table_05_02\">[link]<\/a> about demand for smart phones, calculate the price elasticity of demand from: point B to point C, point D to point E, and point G to point H. Classify the elasticity at each point as elastic, inelastic, or unit elastic.<span style=\"font-size: 0.8em;font-weight: bold\">\u00a0<\/span><\/p>\r\n\r\n<table id=\"Table_05_02\" summary=\"For A, P = 60 and Q = 3,000. For B, P = 70 and Q = 2,800. For C, P = 80 and Q = 2,600. For D, P = 90 and Q = 2,400. For E, P = 100 and Q = 2,200. For F, P = 110 and Q = 2,000. For G, P = 120 and Q = 1,800. For H, P = 130 and Q = 1,600.\">\r\n<thead>\r\n<tr>\r\n<th>Points<\/th>\r\n<th>P<\/th>\r\n<th>Q<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>A<\/td>\r\n<td>60<\/td>\r\n<td>3,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>B<\/td>\r\n<td>70<\/td>\r\n<td>2,800<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>C<\/td>\r\n<td>80<\/td>\r\n<td>2,600<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>D<\/td>\r\n<td>90<\/td>\r\n<td>2,400<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>E<\/td>\r\n<td>100<\/td>\r\n<td>2,200<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>F<\/td>\r\n<td>110<\/td>\r\n<td>2,000<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>G<\/td>\r\n<td>120<\/td>\r\n<td>1,800<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>H<\/td>\r\n<td>130<\/td>\r\n<td>1,600<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n[reveal-answer q=\"214996\"]Show Solution[\/reveal-answer]\r\n[hidden-answer a=\"214996\"]\r\n<div id=\"fs-idp8787376\">\r\n<p id=\"fs-idp19486576\">From point B to point C, price rises from $70 to $80, and Qd decreases from 2,800 to 2,600. So:<\/p>\r\n\r\n<div id=\"fs-idm68197184\">[latex]\\begin{array}{rcl}\\text{% change in quantity}&amp; =&amp; \\frac{2600 - 2800}{\\left(2600+2800\\right)\\div 2}\\times 100\\\\ &amp; =&amp; \\frac{-200}{2700}\\times 100\\\\ &amp; =&amp; -7.41\\\\ \\text{% change in price}&amp; =&amp; \\frac{80 - 70}{\\left(80+70\\right)\\div 2}\\times 100\\\\ &amp; =&amp; \\frac{10}{75}\\times 100\\\\ &amp; =&amp; 13.33\\\\ \\text{Elasticity of Demand}&amp; =&amp; \\frac{-7.41%}{13.33%}\\\\ &amp; =&amp; 0.56\\end{array}[\/latex]<\/div>\r\n<p id=\"fs-idm2642400\">The demand curve is inelastic in this area; that is, its elasticity value is less than one.<\/p>\r\n<p id=\"fs-idm11912864\">Answer from Point D to point E:<\/p>\r\n\r\n<div id=\"fs-idm51022624\">[latex]\\begin{array}{rcl}\\text{% change in quantity}&amp; =&amp; \\frac{2200 - 2400}{\\left(2200+2400\\right)\\div 2}\\times 100\\\\ &amp; =&amp; \\frac{-200}{2300}\\times 100\\\\ &amp; =&amp; -8.7\\\\ \\text{% change in price}&amp; =&amp; \\frac{100 - 90}{\\left(100+90\\right)\\div 2}\\times 100\\\\ &amp; =&amp; \\frac{10}{95}\\times 100\\\\ &amp; =&amp; 10.53\\\\ \\text{Elasticity of Demand}&amp; =&amp; \\frac{-8.7\\% }{10.53\\%}\\\\ &amp; =&amp; 0.83\\end{array}[\/latex]<\/div>\r\n<p id=\"fs-idm2420496\">The demand curve is inelastic in this area; that is, its elasticity value is less than one.<\/p>\r\n<p id=\"fs-idp17544896\">Answer from Point G to point H:<\/p>\r\n\r\n<div id=\"fs-idm9802224\">[latex]\\begin{array}{rcl}\\text{% change in quantity}&amp; =&amp; \\frac{1600 - 1800}{1700}\\times 100\\\\ &amp; =&amp; \\frac{-200}{1700}\\times 100\\\\ &amp; =&amp; -11.76\\\\ \\text{% change in price}&amp; =&amp; \\frac{130 - 120}{125}\\times 100\\\\ &amp; =&amp; \\frac{10}{125}\\times 100\\\\ &amp; =&amp; 8.00\\\\ \\text{Elasticity of Demand}&amp; =&amp; \\frac{-11.76\\% }{8.00\\%}\\\\ &amp; =&amp; -1.47\\end{array}[\/latex]<\/div>\r\n<p id=\"fs-idm26277760\">The demand curve is elastic in this interval.<\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n[\/hidden-answer]\r\n<div id=\"fs-idm14629328\">\r\n<div id=\"fs-idm19516752\">\r\n\r\n&nbsp;\r\n<p id=\"fs-idm9504672\">From the data in <a class=\"autogenerated-content\" href=\"#Table_05_03\">[link]<\/a> about supply of alarm clocks, calculate the price elasticity of supply from: point J to point K, point L to point M, and point N to point P. Classify the elasticity at each point as elastic, inelastic, or unit elastic.<\/p>\r\n\r\n<table id=\"Table_05_03\" summary=\"For J, Price = $8 and Quantity Supplied = 50. For K, Price = $9 and Quantity supplied = 70. For L, Price = $10 and Quantity supplied = 80. For M, Price = $11 and Quantity supplied = 88. For N, Price = $12 and Quantity supplied = 95. For P, Price = $13 and Quantity supplied = 100. \">\r\n<thead>\r\n<tr>\r\n<th>Point<\/th>\r\n<th>Price<\/th>\r\n<th>Quantity Supplied<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>J<\/td>\r\n<td>$8<\/td>\r\n<td>50<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>K<\/td>\r\n<td>$9<\/td>\r\n<td>70<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>L<\/td>\r\n<td>$10<\/td>\r\n<td>80<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>M<\/td>\r\n<td>$11<\/td>\r\n<td>88<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>N<\/td>\r\n<td>$12<\/td>\r\n<td>95<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>P<\/td>\r\n<td>$13<\/td>\r\n<td>100<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n[reveal-answer q=\"843478\"]Show Solution[\/reveal-answer]\r\n[hidden-answer a=\"843478\"]\r\n<div id=\"fs-idp17112768\">\r\n<p id=\"fs-idp14357824\">From point J to point K, price rises from $8 to $9, and quantity rises from 50 to 70. So:<\/p>\r\n\r\n<div id=\"fs-idp103697184\">[latex]\\begin{array}{rcl}\\text{% change in quantity}&amp; =&amp; \\frac{70 - 50}{\\left(70+50\\right)\\div 2}\\times 100\\\\ &amp; =&amp; \\frac{20}{60}\\times 100\\\\ &amp; =&amp; 33.33\\\\ \\text{% change in price}&amp; =&amp; \\frac{$9-$8}{\\left($9+$8\\right)\\div 2}\\times 100\\\\ &amp; =&amp; \\frac{1}{8.5}\\times 100\\\\ &amp; =&amp; 11.76\\\\ \\text{Elasticity of Supply}&amp; =&amp; \\frac{33.33\\%}{11.76\\%}\\\\ &amp; =&amp; 2.83\\end{array}[\/latex]<\/div>\r\n<p id=\"fs-idp2452768\">The supply curve is elastic in this area; that is, its elasticity value is greater than one.<\/p>\r\n<p id=\"fs-idm15405616\">From point L to point M, the price rises from $10 to $11, while the Qs rises from 80 to 88:<\/p>\r\n\r\n<div id=\"fs-idp4084544\">[latex]\\begin{array}{rcl}\\text{% change in quantity}&amp; =&amp; \\frac{88 - 80}{\\left(88+80\\right)\\div 2}\\times 100\\\\ &amp; =&amp; \\frac{8}{84}\\times 100\\\\ &amp; =&amp; 9.52\\\\ \\text{%change in price}&amp; =&amp; \\frac{$11-$10}{\\left($11+$10\\right)\\div 2}\\times 100\\\\ &amp; =&amp; \\frac{1}{10.5}\\times 100\\\\ &amp; =&amp; 9.52\\\\ \\text{Elasticity of Demand}&amp; =&amp; \\frac{9.52\\%}{9.52\\%}\\\\ &amp; =&amp; 1.0\\end{array}[\/latex]<\/div>\r\n<p id=\"fs-idp15429152\">The supply curve has unitary elasticity in this area.<\/p>\r\n<p id=\"fs-idp24136192\">From point N to point P, the price rises from $12 to $13, and Qs rises from 95 to 100:<\/p>\r\n\r\n<div id=\"fs-idp62791120\">[latex]\\begin{array}{rcl}\\text{% change in quantity}&amp; =&amp; \\frac{100 - 95}{\\left(100+95\\right)\\div 2}\\times 100\\\\ &amp; =&amp; \\frac{5}{97.5}\\times 100\\\\ &amp; =&amp; 5.13\\\\ \\text{% change in price}&amp; =&amp; \\frac{$13-$12}{\\left($13+$12\\right)\\div 2}\\times 100\\\\ &amp; =&amp; \\frac{1}{12.5}\\times 100\\\\ &amp; =&amp; 8.0\\\\ \\text{Elasticity of Supply}&amp; =&amp; \\frac{5.13\\%}{8.0\\% }\\\\ &amp; =&amp; 0.64\\end{array}[\/latex]<\/div>\r\n<p id=\"fs-idm783984\">The supply curve is inelastic in this region of the supply curve.<\/p>\r\n&nbsp;\r\n\r\n<\/div>\r\n<\/div>\r\n[\/hidden-answer]\r\n\r\n<\/section><section id=\"fs-idm18385184\" class=\"review-questions\">\r\n<h3>Review Questions<\/h3>\r\n<div id=\"fs-idp18359552\">\r\n<div id=\"fs-idp7772192\">\r\n<p id=\"fs-idm16908240\">What is the formula for calculating elasticity?<\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n<div id=\"fs-idp21393520\">\r\n<div id=\"fs-idp6305984\">\r\n<p id=\"fs-idm75959392\">What is the price elasticity of demand? Can you explain it in your own words?<\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n<div id=\"fs-idp19511776\">\r\n<div id=\"fs-idp10293392\">\r\n<p id=\"fs-idm25657376\">What is the price elasticity of supply? Can you explain it in your own words?<\/p>\r\n&nbsp;\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section><section id=\"fs-idm22494896\" class=\"critical-thinking\">\r\n<h3>Critical Thinking Questions<\/h3>\r\n<div id=\"fs-idp21036976\">\r\n<div id=\"fs-idm21582096\">\r\n<p id=\"fs-idp15550176\">Transatlantic air travel in business class has an estimated elasticity of demand of 0.62, while transatlantic air travel in economy class has an estimated price elasticity of 0.12. Why do you think this is the case?<\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n<div id=\"fs-idp22382384\">\r\n<div id=\"fs-idp20937904\">\r\n<p id=\"fs-idp17479632\">What is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens to the measured elasticity? How would you explain that?<\/p>\r\n&nbsp;\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section><section id=\"fs-idm10272\" class=\"problems\">\r\n<h3>Problems<\/h3>\r\n<div id=\"fs-idm24878656\">\r\n<div id=\"fs-idm16398528\">\r\n<p id=\"fs-idm5772720\">The equation for a demand curve is P = 48 \u2013 3Q. What is the elasticity in moving from a quantity of 5 to a quantity of 6?<\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n<div id=\"fs-idp17107200\">\r\n<div id=\"fs-idp18185280\">\r\n<p id=\"fs-idp21392496\">The equation for a demand curve is P = 2\/Q. What is the elasticity of demand as price falls from 5 to 4? What is the elasticity of demand as the price falls from 9 to 8? Would you expect these answers to be the same?<\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n<div id=\"fs-idp27862512\">\r\n<div id=\"fs-idp16671904\">\r\n<p id=\"fs-idp14162688\">The equation for a supply curve is 4P = Q. What is the elasticity of supply as price rises from 3 to 4? What is the elasticity of supply as the price rises from 7 to 8? Would you expect these answers to be the same?<\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n<div id=\"fs-idp21171984\">\r\n<div id=\"fs-idm10349376\">\r\n<p id=\"fs-idp504864\">The equation for a supply curve is P = 3Q \u2013 8. What is the elasticity in moving from a price of 4 to a price of 7?<span style=\"background-color: #ccd7dd;color: #000000;font-size: 1.2em;font-weight: 600;text-align: center\">\u00a0<\/span><\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section><\/div>\r\n<div class=\"textbox shaded\"><section id=\"fs-idp9020112\">\r\n<div id=\"fs-idm35334384\" class=\"economics clearup\">\r\n<div>\r\n\r\n<span style=\"color: #6c64ad;font-size: 1em;font-weight: 600\">Glossary<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>\r\n<div>\r\n<dl id=\"fs-idm61561936\">\r\n \t<dt>elastic demand<\/dt>\r\n \t<dd id=\"fs-idm96710288\">when the elasticity of demand is greater than one, indicating a high responsiveness of quantity demanded or supplied to changes in price<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idm24173824\">\r\n \t<dt>elastic supply<\/dt>\r\n \t<dd id=\"fs-idm25832416\">when the elasticity of either supply is greater than one, indicating a high responsiveness of quantity demanded or supplied to changes in price<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idm33564032\">\r\n \t<dt>elasticity<\/dt>\r\n \t<dd id=\"fs-idm30931216\">an economics concept that measures responsiveness of one variable to changes in another variable<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idp7341184\">\r\n \t<dt>inelastic demand<\/dt>\r\n \t<dd id=\"fs-idm56193856\">when the elasticity of demand is less than one, indicating that a 1 percent increase in price paid by the consumer leads to less than a 1 percent change in purchases (and vice versa); this indicates a low responsiveness by consumers to price changes<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idm43731456\">\r\n \t<dt>inelastic supply<\/dt>\r\n \t<dd id=\"fs-idm47192112\">when the elasticity of supply is less than one, indicating that a 1 percent increase in price paid to the firm will result in a less than 1 percent increase in production by the firm; this indicates a low responsiveness of the firm to price increases (and vice versa if prices drop)<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idm13676144\">\r\n \t<dt>price elasticity<\/dt>\r\n \t<dd id=\"fs-idm41290704\">the relationship between the percent change in price resulting in a corresponding percentage change in the quantity demanded or supplied<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idm116073520\">\r\n \t<dt>price elasticity of demand<\/dt>\r\n \t<dd id=\"fs-idm37427392\">percentage change in the quantity <em>demanded<\/em> of a good or service divided the percentage change in price<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idm43138848\">\r\n \t<dt>price elasticity of supply<\/dt>\r\n \t<dd id=\"fs-idm8551152\">percentage change in the quantity <em>supplied<\/em> divided by the percentage change in price<\/dd>\r\n<\/dl>\r\n<dl id=\"fs-idm23185328\">\r\n \t<dt>unitary elasticity<\/dt>\r\n \t<dd id=\"fs-idm6079792\">when the calculated elasticity is equal to one indicating that a change in the price of the good or service results in a proportional change in the quantity demanded or supplied<\/dd>\r\n<\/dl>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/section>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Objectives<\/h3>\n<p>By the end of this section, you will be able to:<\/p>\n<ul>\n<li>Calculate the price elasticity of demand<\/li>\n<li>Calculate the price elasticity of supply<\/li>\n<\/ul>\n<\/div>\n<p id=\"delete_me\">Both the demand and supply curve show the relationship between price and the number of units demanded or supplied. <strong>Price elasticity<\/strong> is the ratio between the percentage change in the quantity demanded (Qd) or supplied (Qs) and the corresponding percent change in price. The <strong>price elasticity of demand<\/strong> is the percentage change in the quantity <em>demanded<\/em> of a good or service divided by the percentage change in the price. The <strong>price elasticity of supply<\/strong> is the percentage change in quantity <em>supplied<\/em> divided by the percentage change in price.<\/p>\n<p id=\"fs-idp21961264\">We can usefully divide elasticities into three broad categories: elastic, inelastic, and unitary. An <strong>elastic demand<\/strong> or <strong>elastic supply<\/strong> is one in which the elasticity is greater than one, indicating a high responsiveness to changes in price. Elasticities that are less than one indicate low responsiveness to price changes and correspond to<strong> inelastic demand<\/strong> or <strong>inelastic supply<\/strong>. <strong>Unitary elasticities<\/strong> indicate proportional responsiveness of either demand or supply, as <a class=\"autogenerated-content\" href=\"#Table_05_01\">[link]<\/a> summarizes.<\/p>\n<table id=\"Table_05_01\" summary=\"If percentage change in quantity is greater than percentage change in price then percentage change in quantity divided by percentage change in price is greater than 1, and it is called\">\n<caption>Elastic, Inelastic, and Unitary: Three Cases of Elasticity<\/caption>\n<thead>\n<tr>\n<th>If . . .<\/th>\n<th>Then . . .<\/th>\n<th>And It Is Called . . .<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>[latex]\\text{% change in quantity}>\\text{% change in price}[\/latex]<\/td>\n<td>[latex]\\frac{\\text{% change in quantity}}{\\text{% change in price}}>1[\/latex]<\/td>\n<td>Elastic<\/td>\n<\/tr>\n<tr>\n<td>[latex]2\\pi r[\/latex]<\/td>\n<td>[latex]\\pi {r}^{2}[\/latex]<\/td>\n<td>Unitary<\/td>\n<\/tr>\n<tr>\n<td>[latex]\\text{% change in quantity}<\\text{% change in price}[\/latex]<\/td>\n<td>[latex]\\frac{\\text{% change in quantity}}{\\text{% change in price}}<1[\/latex]<\/td>\n<td>Inelastic<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<div id=\"fs-idm4388720\" class=\"economics linkup\">\n<div class=\"textbox shaded\">\n<p id=\"fs-idm132352\">Before we delve into the details of elasticity, enjoy this <a href=\"http:\/\/openstaxcollege.org\/l\/Super_Bowl\">article<\/a> on elasticity and ticket prices at the Super Bowl.<\/p>\n<p><span id=\"fs-idm17236384\"><br \/>\n<img decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/3164\/2018\/04\/05001816\/Super_Bowl.png\" alt=\"QR Code representing a URL\" width=\"130\" \/><\/span><\/p>\n<\/div>\n<\/div>\n<p id=\"fs-idm47543904\">To calculate elasticity along a demand or supply curve economists use the average percent change in both quantity and price. This is called the Midpoint Method for Elasticity, and is represented in the following equations:<\/p>\n<div id=\"eip-919\">[latex]\\begin{array}{rcl}\\text{% change in quantity}& =& \\frac{{\\mathrm{Q}}_{2}-{\\mathrm{Q}}_{1}}{\\left({\\mathrm{Q}}_{2}+{\\mathrm{Q}}_{1}\\right)\/2} \\times 100\\\\ \\text{% change in price}& =& \\frac{{\\mathrm{P}}_{2}-{\\mathrm{P}}_{1}}{\\left({\\mathrm{P}}_{2}+{\\mathrm{P}}_{1}\\right)\/2} \\times 100\\end{array}[\/latex]<\/div>\n<p id=\"fs-idm24209232\">The advantage of the <span class=\"no-emphasis\">Midpoint Method<\/span> is that one obtains the same elasticity between two price points whether there is a price increase or decrease. This is because the formula uses the same base (average quantity and average price) for both cases.<\/p>\n<section id=\"fs-idm7067040\">\n<h3>Calculating Price Elasticity of Demand<\/h3>\n<p id=\"fs-idm52866832\">Let\u2019s calculate the elasticity between points A and B and between points G and H as <a class=\"autogenerated-content\" href=\"#CNX_Econ_C05_003\">[link]<\/a> shows.<\/p>\n<figure id=\"CNX_Econ_C05_003\">\n<div style=\"width: 595px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/3164\/2018\/04\/05001819\/CNX_Econ_C05_003.jpg\" alt=\"The graph shows a downward sloping line that represents the price elasticity of demand.\" width=\"585\" height=\"378\" \/><\/p>\n<p class=\"wp-caption-text\"><strong>Figure 5.2 Calculating the Price Elasticity of Demand<\/strong> We calculate the price elasticity of demand as the percentage change in quantity divided by the percentage change in price.<\/p>\n<\/div>\n<\/figure>\n<p id=\"fs-idm8831936\">First, apply the formula to calculate the elasticity as price decreases from $70 at point B to $60 at point A:<\/p>\n<div id=\"eip-188\">[latex]\\begin{array}{rcl}\\text{% change in quantity}& =& \\frac{3,000 - 2,800}{\\left(3,000+2,800\\right)\/2} \\times 100\\\\ & =& \\frac{200}{2,900} \\times 100\\\\ & =& 6.9\\\\ \\text{% change in price}& =& \\frac{60 - 70}{\\left(60+70\\right)\/2} \\times 100\\\\ & =& \\frac{-10}{65} \\times 100\\\\ & =& -15.4\\\\ \\text{Price Elasticity of Demand}& =& \\frac{ 6.9%}{-15.4%}\\\\ & =& 0.45\\end{array}[\/latex]<\/div>\n<p id=\"fs-idm46864880\">Therefore, the elasticity of demand between these two points is [latex]\\frac{ 6.9%}{-15.4%}[\/latex] which is 0.45, an amount smaller than one, showing that the demand is inelastic in this interval. Price elasticities of demand are <em>always<\/em> negative since price and quantity demanded always move in opposite directions (on the demand curve). By convention, we always talk about elasticities as positive numbers. Mathematically, we take the absolute value of the result. We will ignore this detail from now on, while remembering to interpret elasticities as positive numbers.<\/p>\n<p id=\"fs-idm10131488\">This means that, along the demand curve between point B and A, if the price changes by 1%, the quantity demanded will change by 0.45%. A change in the price will result in a smaller percentage change in the quantity demanded. For example, a 10% <em>increase<\/em> in the price will result in only a 4.5% <em>decrease<\/em> in quantity demanded. A 10% <em>decrease<\/em> in the price will result in only a 4.5% <em>increase<\/em> in the quantity demanded. Price elasticities of demand are negative numbers indicating that the demand curve is downward sloping, but we read them as absolute values. The following Work It Out feature will walk you through calculating the price elasticity of demand.<\/p>\n<div class=\"textbox shaded\">\n<h3><span style=\"color: #000000;font-size: 1.2em;font-weight: 600;text-align: center\">work it out<\/span><\/h3>\n<p><span style=\"color: #6c64ad;font-size: 0.9em;font-weight: 600\">Finding the Price Elasticity of Demand<\/span><\/p>\n<p><span style=\"font-size: 1rem;text-align: initial\">Calculate the price elasticity of demand using the data in <\/span><a class=\"autogenerated-content\" style=\"font-size: 1rem;text-align: initial\" href=\"#CNX_Econ_C05_003\">[link]<\/a><span style=\"font-size: 1rem;text-align: initial\"> for an increase in price from G to H. Has the elasticity increased or decreased?<\/span><\/p>\n<p><span style=\"font-size: 1rem;text-align: initial\">Step 1. We know that:<\/span><\/p>\n<p><span style=\"font-size: 0.9em\">[latex]\\begin{array}{rcl}\\text{Price Elasticity of Demand}& =& \\frac{\\text{% change in quantity}}{\\text{% change in price}}\\end{array}[\/latex]<\/span><\/p>\n<p><span style=\"font-size: 1rem;text-align: initial\">Step 2. From the <\/span><span class=\"no-emphasis\" style=\"font-size: 1rem;text-align: initial\">Midpoint Formula<\/span><span style=\"font-size: 1rem;text-align: initial\"> we know that:<\/span><\/p>\n<p><span style=\"font-size: 0.9em\">[latex]\\begin{array}{rcl} \\text{change in quantity}& =& \\frac{{\\text{Q}}_{2}-{\\text{Q}}_{1}}{\\left({\\text{Q}}_{2}+{\\text{Q}}_{1}\\right)\/2} \\times 100\\\\ \\text{change in price}& =& \\frac{{\\text{P}}_{2}-{\\text{P}}_{1}}{\\left({\\text{P}}_{2}+{\\text{P}}_{1}\\right)\/2} \\times 100\\end{array}[\/latex]<\/span><\/p>\n<p><span style=\"font-size: 1rem;text-align: initial\">Step 3. So we can use the values provided in the figure in each equation:<\/span><\/p>\n<p><span style=\"font-size: 0.9em\">[latex]\\begin{array}{rcl}\\text{% change in quantity}& =& \\frac{1,600 - 1,800}{\\left(1,600+1,800\\right)\/2} \\times 100\\\\ & =& \\frac{-200}{1,700} \\times 100\\\\ & =& -11.76\\\\ \\text{% change in price}& =& \\frac{130 - 120}{\\left(130+120\\right)\/2} \\times 100\\\\ & =& \\frac{10}{125} \\times 100\\\\ & =& 8.0\\end{array}[\/latex]<\/span><\/p>\n<p><span style=\"font-size: 1rem;text-align: initial\">Step 4. Then, we can use those values to determine the price elasticity of demand:<\/span><\/p>\n<p><span style=\"font-size: 0.9em\">[latex]\\begin{array}{rcl}\\text{Price Elasticity of Demand}& =& \\frac{\\text{% change in quantity}}{\\text{% change in price}}\\\\ & =& \\frac{-11.76}{8}\\\\ & =& 1.47\\end{array}[\/latex]<\/span><\/p>\n<p><span style=\"font-size: 1rem;text-align: initial\">Therefore, the elasticity of demand from G to is H 1.47. The magnitude of the elasticity has increased (in absolute value) as we moved up along the <\/span><span class=\"no-emphasis\" style=\"font-size: 1rem;text-align: initial\">demand curve<\/span><span style=\"font-size: 1rem;text-align: initial\"> from points A to B. Recall that the elasticity between these two points was 0.45. Demand was inelastic between points A and B and elastic between points G and H. This shows us that price elasticity of demand changes at different points along a <\/span><span class=\"no-emphasis\" style=\"font-size: 1rem;text-align: initial\">straight-line demand curve<\/span><span style=\"font-size: 1rem;text-align: initial\">.<\/span><\/p>\n<\/div>\n<\/section>\n<section id=\"fs-idp9020112\">\n<h3>Calculating the Price Elasticity of Supply<\/h3>\n<p id=\"fs-idp11618672\">Assume that an apartment rents for $650 per month and at that price the landlord rents 10,000 units are rented as <a class=\"autogenerated-content\" href=\"#CNX_Econ_C05_023\">[link]<\/a> shows. When the price increases to $700 per month, the landlord supplies 13,000 units into the market. By what percentage does apartment supply increase? What is the price sensitivity?<\/p>\n<figure id=\"CNX_Econ_C05_023\"><figcaption><\/figcaption><div style=\"width: 400px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/3164\/2018\/04\/05001822\/CNX_Econ_C05_023.jpg\" alt=\"The graph shows an upward sloping line that represents the supply of apartment rentals.\" width=\"390\" height=\"316\" \/><\/p>\n<p class=\"wp-caption-text\"><strong>Figure 5.3 Price Elasticity of Supply<\/strong> We calculate the price elasticity of supply as the percentage change in quantity divided by the percentage change in price.<\/p>\n<\/div>\n<\/figure>\n<p id=\"eip-939\">Using the <span class=\"no-emphasis\">Midpoint Method<\/span>,<\/p>\n<div id=\"eip-883\">[latex]\\begin{array}{rcl}\\text{% change in quantity}& =& \\frac{13,000 - 10,000}{\\left(13,000+10,000\\right)\/2} \\times 100\\\\ & =& \\frac{3,000}{11,500} \\times 100\\\\ & =& 26.1\\\\ \\text{% change in price}& =& \\frac{$700-$650}{\\left($700+$650\\right)\/2} \\times 100\\\\ & =& \\frac{50}{675} \\times 100\\\\ & =& 7.4\\\\ \\text{Price Elasticity of Supply}& =& \\frac{26.1%}{ 7.4%}\\\\ & =& 3.53\\end{array}[\/latex]<\/div>\n<p id=\"fs-idm28012240\">Again, as with the elasticity of demand, the elasticity of supply is not followed by any units. Elasticity is a ratio of one percentage change to another percentage change\u2014nothing more\u2014and we read it as an absolute value. In this case, a 1% rise in price causes an increase in quantity supplied of 3.5%. The greater than one elasticity of supply means that the percentage change in quantity supplied will be greater than a one percent price change. If you&#8217;re starting to wonder if the concept of slope fits into this calculation, read the following Clear It Up box.<\/p>\n<div id=\"fs-idm35334384\" class=\"economics clearup\">\n<div class=\"textbox examples\">\n<h3>clear it up<\/h3>\n<section id=\"fs-idp9020112\">\n<div id=\"fs-idm35334384\" class=\"economics clearup\">\n<h4>Is the elasticity the slope?<\/h4>\n<p id=\"fs-idm9625696\">It is a common mistake to confuse the slope of either the supply or demand curve with its elasticity. The slope is the rate of change in units along the curve, or the rise\/run (change in y over the change in x). For example, in <a class=\"autogenerated-content\" href=\"#CNX_Econ_C05_003\">[link]<\/a>, at each point shown on the demand curve, price drops by $10 and the number of units demanded increases by 200 compared to the point to its left. The slope is \u201310\/200 along the entire demand curve and does not change. The price elasticity, however, changes along the curve. Elasticity between points A and B was 0.45 and increased to 1.47 between points G and H. Elasticity is the <em>percentage<\/em> change, which is a different calculation from the slope and has a different meaning.<\/p>\n<p id=\"eip-88\">When we are at the upper end of a demand curve, where price is high and the quantity demanded is low, a small change in the quantity demanded, even in, say, one unit, is pretty big in percentage terms. A change in price of, say, a dollar, is going to be much less important in percentage terms than it would have been at the bottom of the demand curve. Likewise, at the bottom of the demand curve, that one unit change when the quantity demanded is high will be small as a percentage.<\/p>\n<p id=\"eip-927\">Thus, at one end of the demand curve, where we have a large percentage change in quantity demanded over a small percentage change in price, the elasticity value would be high, or demand would be relatively elastic. Even with the same change in the price and the same change in the quantity demanded, at the other end of the demand curve the quantity is much higher, and the price is much lower, so the percentage change in quantity demanded is smaller and the percentage change in price is much higher. That means at the bottom of the curve we&#8217;d have a small numerator over a large denominator, so the elasticity measure would be much lower, or inelastic.<\/p>\n<p id=\"eip-326\">As we move along the demand curve, the values for quantity and price go up or down, depending on which way we are moving, so the percentages for, say, a $1 difference in price or a one unit difference in quantity, will change as well, which means the ratios of those percentages and hence the elasticity will change.<\/p>\n<\/div>\n<\/section>\n<\/div>\n<div class=\"textbox key-takeaways\">\n<h3>Key Concepts and Summary<\/h3>\n<section id=\"fs-idp17381808\" class=\"summary\">\n<ul>\n<li id=\"fs-idp10316160\">Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. We compute it as the percentage change in quantity demanded (or supplied) divided by the percentage change in price. We can describe elasticity as elastic (or very responsive), unit elastic, or inelastic (not very responsive). Elastic demand or supply curves indicate that quantity demanded or supplied respond to price changes in a greater than proportional manner. An inelastic demand or supply curve is one where a given percentage change in price will cause a smaller percentage change in quantity demanded or supplied. A unitary elasticity means that a given percentage change in price leads to an equal percentage change in quantity demanded or supplied.<\/li>\n<\/ul>\n<\/section>\n<\/div>\n<div class=\"textbox exercises\">\n<h3>Self-Check Questions<\/h3>\n<section id=\"fs-idp16124064\" class=\"self-check-questions\">\n<div id=\"fs-idp16086976\">\n<div id=\"fs-idp13810096\">\n<p id=\"fs-idp20371552\">From the data in <a class=\"autogenerated-content\" href=\"#Table_05_02\">[link]<\/a> about demand for smart phones, calculate the price elasticity of demand from: point B to point C, point D to point E, and point G to point H. Classify the elasticity at each point as elastic, inelastic, or unit elastic.<span style=\"font-size: 0.8em;font-weight: bold\">\u00a0<\/span><\/p>\n<table id=\"Table_05_02\" summary=\"For A, P = 60 and Q = 3,000. For B, P = 70 and Q = 2,800. For C, P = 80 and Q = 2,600. For D, P = 90 and Q = 2,400. For E, P = 100 and Q = 2,200. For F, P = 110 and Q = 2,000. For G, P = 120 and Q = 1,800. For H, P = 130 and Q = 1,600.\">\n<thead>\n<tr>\n<th>Points<\/th>\n<th>P<\/th>\n<th>Q<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>A<\/td>\n<td>60<\/td>\n<td>3,000<\/td>\n<\/tr>\n<tr>\n<td>B<\/td>\n<td>70<\/td>\n<td>2,800<\/td>\n<\/tr>\n<tr>\n<td>C<\/td>\n<td>80<\/td>\n<td>2,600<\/td>\n<\/tr>\n<tr>\n<td>D<\/td>\n<td>90<\/td>\n<td>2,400<\/td>\n<\/tr>\n<tr>\n<td>E<\/td>\n<td>100<\/td>\n<td>2,200<\/td>\n<\/tr>\n<tr>\n<td>F<\/td>\n<td>110<\/td>\n<td>2,000<\/td>\n<\/tr>\n<tr>\n<td>G<\/td>\n<td>120<\/td>\n<td>1,800<\/td>\n<\/tr>\n<tr>\n<td>H<\/td>\n<td>130<\/td>\n<td>1,600<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<div class=\"qa-wrapper\" style=\"display: block\"><span class=\"show-answer collapsed\" style=\"cursor: pointer\" data-target=\"q214996\">Show Solution<\/span><\/p>\n<div id=\"q214996\" class=\"hidden-answer\" style=\"display: none\">\n<div id=\"fs-idp8787376\">\n<p id=\"fs-idp19486576\">From point B to point C, price rises from $70 to $80, and Qd decreases from 2,800 to 2,600. So:<\/p>\n<div id=\"fs-idm68197184\">[latex]\\begin{array}{rcl}\\text{% change in quantity}& =& \\frac{2600 - 2800}{\\left(2600+2800\\right)\\div 2}\\times 100\\\\ & =& \\frac{-200}{2700}\\times 100\\\\ & =& -7.41\\\\ \\text{% change in price}& =& \\frac{80 - 70}{\\left(80+70\\right)\\div 2}\\times 100\\\\ & =& \\frac{10}{75}\\times 100\\\\ & =& 13.33\\\\ \\text{Elasticity of Demand}& =& \\frac{-7.41%}{13.33%}\\\\ & =& 0.56\\end{array}[\/latex]<\/div>\n<p id=\"fs-idm2642400\">The demand curve is inelastic in this area; that is, its elasticity value is less than one.<\/p>\n<p id=\"fs-idm11912864\">Answer from Point D to point E:<\/p>\n<div id=\"fs-idm51022624\">[latex]\\begin{array}{rcl}\\text{% change in quantity}& =& \\frac{2200 - 2400}{\\left(2200+2400\\right)\\div 2}\\times 100\\\\ & =& \\frac{-200}{2300}\\times 100\\\\ & =& -8.7\\\\ \\text{% change in price}& =& \\frac{100 - 90}{\\left(100+90\\right)\\div 2}\\times 100\\\\ & =& \\frac{10}{95}\\times 100\\\\ & =& 10.53\\\\ \\text{Elasticity of Demand}& =& \\frac{-8.7\\% }{10.53\\%}\\\\ & =& 0.83\\end{array}[\/latex]<\/div>\n<p id=\"fs-idm2420496\">The demand curve is inelastic in this area; that is, its elasticity value is less than one.<\/p>\n<p id=\"fs-idp17544896\">Answer from Point G to point H:<\/p>\n<div id=\"fs-idm9802224\">[latex]\\begin{array}{rcl}\\text{% change in quantity}& =& \\frac{1600 - 1800}{1700}\\times 100\\\\ & =& \\frac{-200}{1700}\\times 100\\\\ & =& -11.76\\\\ \\text{% change in price}& =& \\frac{130 - 120}{125}\\times 100\\\\ & =& \\frac{10}{125}\\times 100\\\\ & =& 8.00\\\\ \\text{Elasticity of Demand}& =& \\frac{-11.76\\% }{8.00\\%}\\\\ & =& -1.47\\end{array}[\/latex]<\/div>\n<p id=\"fs-idm26277760\">The demand curve is elastic in this interval.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div id=\"fs-idm14629328\">\n<div id=\"fs-idm19516752\">\n<p>&nbsp;<\/p>\n<p id=\"fs-idm9504672\">From the data in <a class=\"autogenerated-content\" href=\"#Table_05_03\">[link]<\/a> about supply of alarm clocks, calculate the price elasticity of supply from: point J to point K, point L to point M, and point N to point P. Classify the elasticity at each point as elastic, inelastic, or unit elastic.<\/p>\n<table id=\"Table_05_03\" summary=\"For J, Price = $8 and Quantity Supplied = 50. For K, Price = $9 and Quantity supplied = 70. For L, Price = $10 and Quantity supplied = 80. For M, Price = $11 and Quantity supplied = 88. For N, Price = $12 and Quantity supplied = 95. For P, Price = $13 and Quantity supplied = 100.\">\n<thead>\n<tr>\n<th>Point<\/th>\n<th>Price<\/th>\n<th>Quantity Supplied<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>J<\/td>\n<td>$8<\/td>\n<td>50<\/td>\n<\/tr>\n<tr>\n<td>K<\/td>\n<td>$9<\/td>\n<td>70<\/td>\n<\/tr>\n<tr>\n<td>L<\/td>\n<td>$10<\/td>\n<td>80<\/td>\n<\/tr>\n<tr>\n<td>M<\/td>\n<td>$11<\/td>\n<td>88<\/td>\n<\/tr>\n<tr>\n<td>N<\/td>\n<td>$12<\/td>\n<td>95<\/td>\n<\/tr>\n<tr>\n<td>P<\/td>\n<td>$13<\/td>\n<td>100<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<div class=\"qa-wrapper\" style=\"display: block\"><span class=\"show-answer collapsed\" style=\"cursor: pointer\" data-target=\"q843478\">Show Solution<\/span><\/p>\n<div id=\"q843478\" class=\"hidden-answer\" style=\"display: none\">\n<div id=\"fs-idp17112768\">\n<p id=\"fs-idp14357824\">From point J to point K, price rises from $8 to $9, and quantity rises from 50 to 70. So:<\/p>\n<div id=\"fs-idp103697184\">[latex]\\begin{array}{rcl}\\text{% change in quantity}& =& \\frac{70 - 50}{\\left(70+50\\right)\\div 2}\\times 100\\\\ & =& \\frac{20}{60}\\times 100\\\\ & =& 33.33\\\\ \\text{% change in price}& =& \\frac{$9-$8}{\\left($9+$8\\right)\\div 2}\\times 100\\\\ & =& \\frac{1}{8.5}\\times 100\\\\ & =& 11.76\\\\ \\text{Elasticity of Supply}& =& \\frac{33.33\\%}{11.76\\%}\\\\ & =& 2.83\\end{array}[\/latex]<\/div>\n<p id=\"fs-idp2452768\">The supply curve is elastic in this area; that is, its elasticity value is greater than one.<\/p>\n<p id=\"fs-idm15405616\">From point L to point M, the price rises from $10 to $11, while the Qs rises from 80 to 88:<\/p>\n<div id=\"fs-idp4084544\">[latex]\\begin{array}{rcl}\\text{% change in quantity}& =& \\frac{88 - 80}{\\left(88+80\\right)\\div 2}\\times 100\\\\ & =& \\frac{8}{84}\\times 100\\\\ & =& 9.52\\\\ \\text{%change in price}& =& \\frac{$11-$10}{\\left($11+$10\\right)\\div 2}\\times 100\\\\ & =& \\frac{1}{10.5}\\times 100\\\\ & =& 9.52\\\\ \\text{Elasticity of Demand}& =& \\frac{9.52\\%}{9.52\\%}\\\\ & =& 1.0\\end{array}[\/latex]<\/div>\n<p id=\"fs-idp15429152\">The supply curve has unitary elasticity in this area.<\/p>\n<p id=\"fs-idp24136192\">From point N to point P, the price rises from $12 to $13, and Qs rises from 95 to 100:<\/p>\n<div id=\"fs-idp62791120\">[latex]\\begin{array}{rcl}\\text{% change in quantity}& =& \\frac{100 - 95}{\\left(100+95\\right)\\div 2}\\times 100\\\\ & =& \\frac{5}{97.5}\\times 100\\\\ & =& 5.13\\\\ \\text{% change in price}& =& \\frac{$13-$12}{\\left($13+$12\\right)\\div 2}\\times 100\\\\ & =& \\frac{1}{12.5}\\times 100\\\\ & =& 8.0\\\\ \\text{Elasticity of Supply}& =& \\frac{5.13\\%}{8.0\\% }\\\\ & =& 0.64\\end{array}[\/latex]<\/div>\n<p id=\"fs-idm783984\">The supply curve is inelastic in this region of the supply curve.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<section id=\"fs-idm18385184\" class=\"review-questions\">\n<h3>Review Questions<\/h3>\n<div id=\"fs-idp18359552\">\n<div id=\"fs-idp7772192\">\n<p id=\"fs-idm16908240\">What is the formula for calculating elasticity?<\/p>\n<\/div>\n<\/div>\n<div id=\"fs-idp21393520\">\n<div id=\"fs-idp6305984\">\n<p id=\"fs-idm75959392\">What is the price elasticity of demand? Can you explain it in your own words?<\/p>\n<\/div>\n<\/div>\n<div id=\"fs-idp19511776\">\n<div id=\"fs-idp10293392\">\n<p id=\"fs-idm25657376\">What is the price elasticity of supply? Can you explain it in your own words?<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<\/section>\n<section id=\"fs-idm22494896\" class=\"critical-thinking\">\n<h3>Critical Thinking Questions<\/h3>\n<div id=\"fs-idp21036976\">\n<div id=\"fs-idm21582096\">\n<p id=\"fs-idp15550176\">Transatlantic air travel in business class has an estimated elasticity of demand of 0.62, while transatlantic air travel in economy class has an estimated price elasticity of 0.12. Why do you think this is the case?<\/p>\n<\/div>\n<\/div>\n<div id=\"fs-idp22382384\">\n<div id=\"fs-idp20937904\">\n<p id=\"fs-idp17479632\">What is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens to the measured elasticity? How would you explain that?<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<\/section>\n<section id=\"fs-idm10272\" class=\"problems\">\n<h3>Problems<\/h3>\n<div id=\"fs-idm24878656\">\n<div id=\"fs-idm16398528\">\n<p id=\"fs-idm5772720\">The equation for a demand curve is P = 48 \u2013 3Q. What is the elasticity in moving from a quantity of 5 to a quantity of 6?<\/p>\n<\/div>\n<\/div>\n<div id=\"fs-idp17107200\">\n<div id=\"fs-idp18185280\">\n<p id=\"fs-idp21392496\">The equation for a demand curve is P = 2\/Q. What is the elasticity of demand as price falls from 5 to 4? What is the elasticity of demand as the price falls from 9 to 8? Would you expect these answers to be the same?<\/p>\n<\/div>\n<\/div>\n<div id=\"fs-idp27862512\">\n<div id=\"fs-idp16671904\">\n<p id=\"fs-idp14162688\">The equation for a supply curve is 4P = Q. What is the elasticity of supply as price rises from 3 to 4? What is the elasticity of supply as the price rises from 7 to 8? Would you expect these answers to be the same?<\/p>\n<\/div>\n<\/div>\n<div id=\"fs-idp21171984\">\n<div id=\"fs-idm10349376\">\n<p id=\"fs-idp504864\">The equation for a supply curve is P = 3Q \u2013 8. What is the elasticity in moving from a price of 4 to a price of 7?<span style=\"background-color: #ccd7dd;color: #000000;font-size: 1.2em;font-weight: 600;text-align: center\">\u00a0<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<div class=\"textbox shaded\">\n<section id=\"fs-idp9020112\">\n<div id=\"fs-idm35334384\" class=\"economics clearup\">\n<div>\n<p><span style=\"color: #6c64ad;font-size: 1em;font-weight: 600\">Glossary<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n<div>\n<dl id=\"fs-idm61561936\">\n<dt>elastic demand<\/dt>\n<dd id=\"fs-idm96710288\">when the elasticity of demand is greater than one, indicating a high responsiveness of quantity demanded or supplied to changes in price<\/dd>\n<\/dl>\n<dl id=\"fs-idm24173824\">\n<dt>elastic supply<\/dt>\n<dd id=\"fs-idm25832416\">when the elasticity of either supply is greater than one, indicating a high responsiveness of quantity demanded or supplied to changes in price<\/dd>\n<\/dl>\n<dl id=\"fs-idm33564032\">\n<dt>elasticity<\/dt>\n<dd id=\"fs-idm30931216\">an economics concept that measures responsiveness of one variable to changes in another variable<\/dd>\n<\/dl>\n<dl id=\"fs-idp7341184\">\n<dt>inelastic demand<\/dt>\n<dd id=\"fs-idm56193856\">when the elasticity of demand is less than one, indicating that a 1 percent increase in price paid by the consumer leads to less than a 1 percent change in purchases (and vice versa); this indicates a low responsiveness by consumers to price changes<\/dd>\n<\/dl>\n<dl id=\"fs-idm43731456\">\n<dt>inelastic supply<\/dt>\n<dd id=\"fs-idm47192112\">when the elasticity of supply is less than one, indicating that a 1 percent increase in price paid to the firm will result in a less than 1 percent increase in production by the firm; this indicates a low responsiveness of the firm to price increases (and vice versa if prices drop)<\/dd>\n<\/dl>\n<dl id=\"fs-idm13676144\">\n<dt>price elasticity<\/dt>\n<dd id=\"fs-idm41290704\">the relationship between the percent change in price resulting in a corresponding percentage change in the quantity demanded or supplied<\/dd>\n<\/dl>\n<dl id=\"fs-idm116073520\">\n<dt>price elasticity of demand<\/dt>\n<dd id=\"fs-idm37427392\">percentage change in the quantity <em>demanded<\/em> of a good or service divided the percentage change in price<\/dd>\n<\/dl>\n<dl id=\"fs-idm43138848\">\n<dt>price elasticity of supply<\/dt>\n<dd id=\"fs-idm8551152\">percentage change in the quantity <em>supplied<\/em> divided by the percentage change in price<\/dd>\n<\/dl>\n<dl id=\"fs-idm23185328\">\n<dt>unitary elasticity<\/dt>\n<dd id=\"fs-idm6079792\">when the calculated elasticity is equal to one indicating that a change in the price of the good or service results in a proportional change in the quantity demanded or supplied<\/dd>\n<\/dl>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-156\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Principles of Macroeconomics 2e. <strong>Provided by<\/strong>: OpenStax. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/cnx.org\/contents\/27f59064-990e-48f1-b604-5188b9086c29@5.5\">http:\/\/cnx.org\/contents\/27f59064-990e-48f1-b604-5188b9086c29@5.5<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em>. <strong>License Terms<\/strong>: Download for free at http:\/\/cnx.org\/contents\/27f59064-990e-48f1-b604-5188b9086c29@5.5<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":2,"menu_order":2,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"Principles of Macroeconomics 2e\",\"author\":\"\",\"organization\":\"OpenStax\",\"url\":\"http:\/\/cnx.org\/contents\/27f59064-990e-48f1-b604-5188b9086c29@5.5\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"Download for free at http:\/\/cnx.org\/contents\/27f59064-990e-48f1-b604-5188b9086c29@5.5\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-156","chapter","type-chapter","status-publish","hentry"],"part":147,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/pressbooks\/v2\/chapters\/156","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/wp\/v2\/users\/2"}],"version-history":[{"count":8,"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/pressbooks\/v2\/chapters\/156\/revisions"}],"predecessor-version":[{"id":1128,"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/pressbooks\/v2\/chapters\/156\/revisions\/1128"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/pressbooks\/v2\/parts\/147"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/pressbooks\/v2\/chapters\/156\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/wp\/v2\/media?parent=156"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/pressbooks\/v2\/chapter-type?post=156"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/wp\/v2\/contributor?post=156"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-fmcc-macroeconomics\/wp-json\/wp\/v2\/license?post=156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}