Microeconomics 2nd Note
Price Elasticcity Ranges
– Percentage change in quantity demanded is smaller than the percentage change in
price
– Total expenditures and price are directly related in the inelastic region of the demand
curve
Elastic Demand: % change in Q> % change in P; Ep>1
Unit-elastic: “ in Q = % change in P; Ep=1
Inelastic Demand: “ in Q<% change in P; Ep<1
*Total revenue = P x Q
Elasticity-revenue Relationship
– Total revenues are the product of price times units sold
– The law of demand states along a given curve, price is inverse to quantity
