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

Uses of national income statistics, Uses of national income statistics: ...

Uses of national income statistics: - It helps to organize economic data and activities. - It helps to classify economic activities into various segments or sectors. - It he

Production function, A competitive firm produces output using three fixed f...

A competitive firm produces output using three fixed factors and one variable factor. The firm’s short-run production function is q = 154x – 5x2, where x is the amount of variable

Solve, 1. Suppose that Mr. John has the following Cobb-Douglas utility func...

1. Suppose that Mr. John has the following Cobb-Douglas utility function U = 6X^2/3y^1/3 the market price of X and Y commodity are $1 and $2, respe

Principle agent problem, Principle Agent Problem [Dealing with hidden actio...

Principle Agent Problem [Dealing with hidden action] Assume that the employer (principle) wants its employee (agent) to work hard [You can safely assume that this maximizes th

ENVIRONMENTAL POLLUTION TYPES, Pollutant Any substance, species produc...

Pollutant Any substance, species produced either by a natural source or by human activity, which produces very adverse effect on the environment is called pollutant. Some commo

Money and banking., excess reserve make a bank less vulnerable to runs.why

excess reserve make a bank less vulnerable to runs.why

Easy, what are the factors influencing supply

what are the factors influencing supply

Indifference curves, Indifference curves present all possible combinations ...

Indifference curves present all possible combinations of market baskets that give the similar level of satisfaction to a person. Indifference Curves 1. Indifferen

Microeconomies, Why some country saving less and consumption more?

Why some country saving less and consumption more?

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