13 January 2016

Elasticity of Demand

• It is a measure of how consumer react react to a change in price.
• Elastic demand: demand that is very sensitive to a change in price.
• E>1, not a necessity, & there sub. 
• Inelastic demand: demand that is very sensitive to a change in price.
• E<1, a necessity, fewer or no sub, people will buy no matter what.
• Unit / Unitary 
• E=1

  Elastic demand                                                   

• Soda
• Steaks
• Candy 
• Fur coats
• Inelastic demand

       ○Gas

       ○Salt

       ○Medicine 

       ○Milk

       ○Toothpaste

Price Elasticity of Demand (PED)

Total Revenue 

●Total amount of money farm receive from selling goods and service.

       ○TR=P×Q

For more information you can watch this video:

https://m.youtube.com/watch?v=4oj_lnj6pXA