Writetheformuladown 2 donotusenegativenumbers 3

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: s 21:15 Inelastic vs Elastic Five tests for figuring out elasticity of demand 21:15 Inelastic vs Elastic 21:15 Inelastic­Few substitutes Elastic­Many Substitues Inelastic­Necessity Elastic­ Luxury Inelastic­ Inexpenisve Elastic­ Expensive PxQ=TR (total revenue) Inelastic­ Price increases total revenue increases Elastic­ Price increases total revenue decreases To figure out the coefficient you must know the formula for Elasticity of Demand Formula for elasticity of demand Ed= the percentage change in quantity demanded divided by the percentage change in price Ed= %Δ in Qd/ %Δ in P Numerator: %Δ in Qd= Δ in Qd/ Qd Denominator: %Δ in P= Δ in P/ P ED= Δ in Qd/ Qd x P/ ΔP The 5 steps in figuring out the elasticity coefficient: 1. Write the formula down 2. DO N...
View Full Document

Ask a homework question - tutors are online