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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...
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