elasticity of demand d. e. weir lawrence central high school
TRANSCRIPT
![Page 1: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/1.jpg)
Elasticity of Demand
D. E. WeirLawrence Central High School
![Page 2: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/2.jpg)
Definition
ElasticityElasticity
describes the
way that
consumers (you)
respond to price
changes.
![Page 3: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/3.jpg)
Inelastic
A priceincrease willnot changetheconsumer’sdemand.
![Page 4: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/4.jpg)
Elastic
A price
change will
change the
consumer’s
demand.
![Page 5: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/5.jpg)
Graphs
$
Q
$
Q
Inelastic Elastic
![Page 6: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/6.jpg)
Total Revenue Test
Elastic – If you increase price and you get less income.
Inelastic – If you change the price and you have the same or greater income
![Page 7: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/7.jpg)
Total Revenue Test
Pre-Change Price X Quan. Sold = TR
![Page 8: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/8.jpg)
Total Revenue Test
Pre-Change Price X Quan. Sold = TR
$2.00 X 150 =
![Page 9: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/9.jpg)
Total Revenue Test
Pre-Change Price X Quan. Sold = TR
$2.00 X 150 = $300
![Page 10: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/10.jpg)
Total Revenue Test
Pre-Change Price X Quan. Sold = TR
$2.00 X 150 = $300
Post-Change Price X Quan. Sold = TR
![Page 11: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/11.jpg)
Total Revenue Test
Pre-Change Price X Quan. Sold = TR
$2.00 X 150 = $300
Post-Change Price X Quan. Sold = TR
$2.50 X 100 =
![Page 12: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/12.jpg)
Total Revenue Test
Pre-Change Price X Quan. Sold = TR
$2.00 X 150 = $300
Post-Change Price X Quan. Sold = TR
$2.50 X 100 = $250
![Page 13: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/13.jpg)
Was there a significant change in Revenue? Yes = Elastic No = Inelastic
![Page 14: Elasticity of Demand D. E. Weir Lawrence Central High School](https://reader036.vdocuments.net/reader036/viewer/2022062322/5697bfa11a28abf838c95970/html5/thumbnails/14.jpg)
Factors Affecting Elasticity
Availability of substitutes Relative importance Necessities vs. luxuries Time