# Firms and customers III

Materials for class on Tuesday, February 20, 2018

## Elasticity of demand

Recall that the simpler version of the formula for elasticity for demand is $$- \frac{\Delta Q}{\Delta P} \times \frac{P}{Q}$$. You can see the algebra behind this on the page for class 11.

\begin{align} \varepsilon &= -\frac{\% \text{ change in demand}}{\% \text{ change in price}} = - \frac{\Delta Q}{\Delta P} \times \frac{P}{Q} \end{align}