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

Time serie, uses of time series in indian economy

uses of time series in indian economy

What is average revenue and average revenue curve, What is average revenue ...

What is average revenue and average revenue curve Average Revenue:   The average revenue is the total revenue separated by the level of output. It is therefore the price.

Supply and demand, During the 1990s, technological advance reduced the cost...

During the 1990s, technological advance reduced the cost of computer chips. Explain, with the use of supply and demand diagrams, how the following markets are affected in terms of

How is the wrong conclusion result in necessary condition, How is the wrong...

How is the wrong conclusion result in necessary condition not in the sufficient condition? This is often heard that the market institution must not be used based onto the fact

Economics, What happens when oil eventually runs out?? can''t we just pay ...

What happens when oil eventually runs out?? can''t we just pay doctors and nurses more money?? The unemployed should get off their backsides and get a job??

Isoquant, if the price of labour is 2000 per hour and the price of capital ...

if the price of labour is 2000 per hour and the price of capital is 1000 per hour.is there an efficiency point of production.

Types of external economies generates the output, What types of external ec...

What types of external economies generates the output which reduces the costs of the firms in it? The chief example of external economies provided by marshal are (i) improved

Utility and Choice(Assumptions about preferences), Explain the axioms of co...

Explain the axioms of completeness, transitivity and non-satiation using appropriate examples.

Business card etiquette, "In U.S., there is a culture of greeting people of...

"In U.S., there is a culture of greeting people of the same sex. It's not common that people give attention to the people of the opposite sex. However, in the middle class, it's a

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