Lecture 9,10

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Economics
  Chemical Engineering Economics Instructor: AamirAbbas University of Engineering and   Technology Lahore Che   -   309 Introduction to economics: Demand, supply and   governmental policies  Learning Objectives  To get the idea about price elasticity of demand.  To study the supply, demand, and their relation with government policies  To define price ceiling and price floor.  To learn about taxes.  2  Price elasticity of demand  It is a measure of how much the quantity demanded of a good responds to achange in the price of that good,computed as the  percentage changein quantity demanded divided by thepercentage change in price. 3  Elastic and inelastic demand  Demand for a good is said to be elastic if the quantity demanded responds substantially to changes in the price.  Demand is said to be inelastic if the quantity demanded responds only slightly to changes in theprice.  Necessities tend to have inelastic demands, whereas luxuries have elastic demands. 4
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