Elastic and inelastic demand, Microeconomics

Assignment Help:

Elastic and Inelastic Demand can be understood as follows:

Slope and elasticity of demand have an inverse relationship between them. When slope is high elasticity of demand becomes low and vice versa.

When the slope of the demand curve is infinity, elasticity becomes zero (perfectly inelastic demand); and when slope of the demand curve is zero, elasticity becomes infinite (perfectly elastic demand). Unit elasticity means that a 1% change in cost will result in an exact 1% change in quantity demanded. Hence elasticity will be equal to one. A unit elastic demand curve plots a rectangular hyperbola. Note that the straight line demand curve cannot have unit elasticity as the value of elasticity changes along with the straight line demand curve.

Total revenue and Elasticity can be described as follows:

The Total revenue (TR) = Price x Quantity; when the demand curve becomes inelastic, TR increases as the cost goes up, and vice versa; when the demand curve becomes elastic, TR falls as the price increases, and vice versa.

 


Related Discussions:- Elastic and inelastic demand

Narrowness definition of commodity, Why narrowness of definition of a commo...

Why narrowness of definition of a commodity may influence price elasticity of demand

Vulnerability in international relations, Vulnerability in international re...

Vulnerability in international relations: Dominance, dependence and vulnerability in international relations.A greater volume of Ghana’s exports comes from primary commodities

.redox, how to write an half equation

how to write an half equation

Homework questions, If a large amount of skilled labor immigrated into the ...

If a large amount of skilled labor immigrated into the country, which allows the available resources to produce more of goods X and Y, which of the following will occur? A.the y-i

Perfect competition in neoclassical economics, Q. Perfect Competition in ne...

Q. Perfect Competition in neoclassical economics? Perfect Competition: An abstract assumption, central to neoclassical economics, in that companies are so small that none can i

The demand for big macs, Ask question #Min1) Illustrate and explain the cha...

Ask question #Min1) Illustrate and explain the changing demand for big Mac using the indifference curve and budget line.imum 100 words accepted#

Is economic development is based on goverment, Is economic development is b...

Is economic development is based on goverment Many governments--mainly unelected governments-aren't that interested in economic development. Giving valuable industrial franchis

Sasa, cual es la minina

cual es la minina

Law of cardinal utility approach, ??????? ??? ???? ??? # 100 ?????? #Minimu...

??????? ??? ???? ??? # 100 ?????? #Minimum ?????? ?????

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd