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3 Cards in this Set
- Front
- Back
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Elasticity Formula |
|Q1-Q2| / |Q1 + Q2| / |P1 - P2| / |P1 + P2| |
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Definitions |
Greater than one- Demand is in a relatively elastic range Equal to One- Demand has unitary elasticity. Less than one- Demand is in a relatively inelastic range. Infinite- Demand is in relatively inelastic range. Example pure competition, the number of firms is so great that one firm cannot influence market. Equal to Zero- Perfect Inelastic |
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Effect in Total Revenue |
Price Increase: Elastic Range (Decrease), Unitary Elasticity (No change) Inelastic Range (Increase) Price Decrease: Elastic Range (Increase) Unitary Elasticity (No change) Inelastic Range (Decrease) |
