Elasticity

Question 1

What is the elasticity of demand formula?

Answer 1

% Change in Quantity / % Change in Price

Question 2

After you calculate elasticity from the formula, how can you tell wether something is Elastic, Unitary, or Inelastic?

Answer 2

CALCULATED OUT IS:

• GREATER THAN 1 = ELASTIC
• EQUAL TO 1- UNITARY
• LESS THAN ONE- INELASTIC `

Question 3

If you get an outcome of elasticity that is greater than one, how does that impact total revenue?

Answer 3

DECREASE IN REVENUE

DEMAND > PRICE

Question 4

If you get an outcome that is inelastic or the result is less than one, how does that impact total revenue?

Answer 4

INCREASE TOTAL REVENUE

PRICE > DEMAND