Price elasticity of demand
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- Price Elasticity of Demand Overview:
- Definition for Elasticity
- Analyze supply and demand with good precision
- How buyers and sellers respond to change
- Price Elasticity of Demand
- Why is it important
- Formulas for Price Elasticity of Demand
- Two ways to calculate Elasticity of Demand
- Point Elasticity of Demand
- Arc Elasticity of Demand
- An Example of using both
- Notes about Price Elasticity of Demand
- Why use average price and quantity?
- Percentages and Proportions
- Units-Free Measure
- Types of Demand Curves
- Inelastic demand and elastic demand
- What each value of elasticity means
- Perfectly inelastic, perfectly elastic, unit elastic
- Total Revenue and Price Elasticity of Demand
- How to calculate total revenue
- How revenue changes in an inelastic demand
- How revenue changes in an elastic demand
- How revenue changes in a unit elastic demand
- Understanding Price Elasticity of Demand
Suppose the price of oranges increases from $1 to $3 a box, and the quantity demanded decreases from 500 to 300 boxes a day. Calculate the point elasticity of demand and the arc elasticity of demand.
- If the quantity of car services demanded increases by 30% when the price of car services decrease by 20%, is the demand for car service elastic, inelastic, or unit elastic?
- The following graph shows the demand for books.
- Suppose the company decided to decrease the price of chocolate from $10 to $6. They expect that the price cut will boost the chocolate sales by 40%.
- Suppose the company decided to decrease the quantity of phones from to 100 to 70. They expect that the quantity cut will boost the price sales by 22.2%.