50 d 0 39 41 q price elasticity of demand price

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Unformatted text preview: 0 . 39 41 Q Price Elasticity of Demand Price • elastic – a % change in a product’s price causes a greater % change in the quantity demanded • unit-elastic – a % change in a product’s price causes an equal % change in the quantity demanded • inelastic – a % change in a product’s price causes a smaller % change in the quantity demanded Perfectly Inelastic Perfectly P D1 η=0 0 Q Perfectly Elastic Perfectly P η= ∞ D3 0 Q Price (dollars per pizza) Elasticity Along a Straight-Line Demand Curve Demand 25.00 20.00 15.00 12.50 10.00 5.00 0 10 20 25 30 40 50 Quantity (pizzas per hour) Price (dollars per pizza) 25.00 15.00 Unit elastic 12.50 10.00 (billions of dollars) Total Revenue Price 20.00 Elastic demand Inelastic Inelastic demand demand 5.00 0 350.00 350.00 312.50...
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This document was uploaded on 03/13/2014.

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