Chapter 3 Quantification
Practical use of supply and demand generally requires quantifying effects. If a hurricane wipes out a gasoline refinery, by how much will the price rise, and for how long will it stay high? When the price of energy efficient light bulbs falls, how long does it take to replace 50% of our incandescent stock of bulbs? This chapter introduces the basic tools of quantification, the elasticities of demand and supply. Economists use elasticityThe percentage change in one variable for a small percentage change in another., the percentage change in one variable for a small percentage change in another, in many different settings.