Elasticity (2) - 12.6 Elasticity Demand for a product is typically directly related to the price As price goes up demand goes down and as price goes

# Elasticity (2) - 12.6 Elasticity Demand for a product...

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12.6 Elasticity Demand for a product is typically directly related to the price. As price goes up, demand goes down and as price goes down, demand goes up. Sometimes, raising prices only makes demand go down a small amount and Revenue will still increase with the price increase. Other times, raising prices will make demand go down a large amount and Revenue will decrease with the price increase. Calculating the Elasticity of Demand will help us determine whether a price increase at a particular price point will increase Revenue or not. Elasticity = 𝐸 = % ?????𝑎?? 𝑖? ???𝑎?? % 𝑖????𝑎?? 𝑖? ??𝑖?? = 𝑑? ? 𝑑? ? = − ?? ?? ? ? 1) If 𝑬 < 𝟏 at a particular price point, then Demand is inelastic and raising prices will increase Revenue. 2) If 𝑬 = 𝟏 at a particular price point, then Demand is