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Economics Chapter Four - Economics Chapter Four We can draw...

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Economics Chapter Four We can draw the demand curve many different ways with different slopes. TH eslope of the curve tells us how price-sensitive people are. The higher the slope, the less price- sensitive people are.TR is total revenue, the function of Price x Quantity. TR = P x Q. Unitary Demand = changing prices does not change revenue. Elastic Demand = Changes in price changes total revenue. Increase in price lowers total revenue. Indicates that people are price-sensitive. Has a flatter curve. Bigger prices lower the expected amounts to be sold a lot. Inelastic Demand = As price goes up so does total revenue. Expected amounts sold still go down, but not so significantly. Steeper slope. Less price sensitive people. Graphed line looks like the letter “I”. Gasoline has a very inelastic demand cuve. Necessities tend to have an inelastic curve. When is it a good time to change out price? Do we want to increase or decrease price?
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