ECON 202 1nd Edition Lecture 8 Outline of Last Lecture II Elasticity III The Midpoint Method IV Real World Elasticity Outline of Current Lecture V Elasticity VI Total Revenue Current Lecture Inelastic ED 1 not sensitive Elastic ED 1 sensitive The Most Elastic Example Life Saving Medication The Most Inelastic Demand Curve Perfectly Inelastic ED Infinity ED 1 Change in Quantity Change in Price ED 1 Change in Quantity Change in Price These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute ED 1 Change in Quantity Change in Price Change in Price 1 10 9 1 10 9 20 Change in Quantity 1100 900 1100 900 2 20 Change in Quantity 1050 950 1050 950 2 10 Change in Quantity 40 Total Revenue Price Quantity TR P Q Total Revenue is 2 times 100 Price Effect Sell units for a higher price Quantity Effect sell fewer units TR Increase Price Decrease Quantity ED 1 Raise in Price A Decrease in Total Revenue ED 1 Raise in Price An Increase in Total Revenue ED 1 Raise in Price No change in Total Revenue Back to Example with Three Graphs TR 9 990 945 1080 TR1 1o 900 1045 880 PRICE Total Revenue 10 0 9 9 8 16 7 21 A steeper curve will be less elastic What Determines Elasticity 1 Are there close substitutes a Is there something else you could get instead of that good i Yes elastic No inelastic 2 Necessity or a Luxury a Necessity inelastic Luxury elastic 3 Share of Income Spent on that Good a A lot elastic Little inelastic 4 Time a More time elastic Less time inelastic
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