Elastic demand means the quantity demanded is responsive to price changes. When prices rise by 5%, according to the law of demand, the quantity demanded falls by more than 5%. Conversely, when prices fall by 5%, the quantity demanded rises by more
Own Price Elasticity of Demand
How elasticity affects total revenue
Before answering how elasticity affects total revenue, you need to recall the following concepts in economics:Own-price elasticity of demand. It measures the responsiveness of changes in quantity demanded when prices change. Demand is price
How substitution affects elasticity?
The presence of substitution affects elasticity because it provides alternative choices in consuming products or servicesIf a substitute product is available, consumers tend to turn to these alternative products when the price of a product or
Unitary Elastic of Demand: Meaning and Explanation
Unitary elasticity of demand is a situation in which the price change affects the quantity demanded at an equivalent percentage. For example, when the price of a good rises 3%, the quantity demanded decreases by 3%. And, when the price drops by 3%,
Perfectly Elastic Demand: Definition, How To Calculate, Curves
Perfectly inelastic demand is when the quantity demanded is unresponsive to the price change. Changes in the price of a product don't affect the quantity demanded to rise or fall. When the price rises, demand will remain the same. Vice versa, when
Own-Price Elasticity of Demand: Formula, Calculation, Types, Importance
Own-price elasticity of demand measures how responsive demand is when the price of goods changes. It is elastic or responsive when a slight change in price causes a more significant change to the quantity demanded. In contrast, when the quantity