BSB113 Chapter 4: Lecture Preparation 2 - Week 3
Document Summary
Price of elasticity demand = percentage change in quantity demanded/ percentage change in price. Elastic demand: demand is elastic when the percentage change in quantity demanded is greater than the percentage change in price, so the price elasticity is greater than 1 in absolute value. Inelastic demand: demand is inelastic when the percentage change in quantity demanded is less than the percentage change in price, so the price elasticity is less than 1 in absolute value. Unit-elastic demand: demand is unit-elastic when the percentage change in quantity demanded is equal to the percentage change in price, so the price elasticity is equal to 1 in absolute value. Share of the good in the consumer"s budget. Total revenue = the total amount of funds received by a seller of a good or service, When demand is inelastic, price and total revenue move in the same direction: an. When demand is elastic, price and total revenue move inversely: an increase in price.
