MEASURES PROPORTIONATE CHANGE IN QUANTITY DEMANDED FOR A GOOD CAUSED BY THE PROPORTIONATE CHANGE IN THE PRICE OF THE GOOD ITSELF

FORMULA: TOTAL QUANTITY X PRICE 1 + PRICE 2
TOTAL PRICE QUANTITY 1 + QUANTITY 2

RESULT:

> 1 = ELASTIC - PRICE INCREASE = DEMAND DECREASE - PRICE INCREASE = TOTAL REVENUE DECREASE
< 1 = INELASTIC - P. INREASE = LITTLE CHANGE - P. INCREASE = TR INCREASE
= 1 = UNITARY ELASTIC - P. INCREASE 10% = DEMAND DECREASE 10% - P. INCREACE = TR DECREASE
O = PERFECTLY INELASTIC - P.INCREASE = NO CHANGE
INFINITY = PERFECTLY ELASTIC - P. INCREASE = DEMAND -> O

	Created by Niamh Browne about 8 years ago

Leaving Cert. Economics Elasticity