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Transcript

Make a list of 5 items you purchase each
month.
• Next to each item, put its price and the
quantity you purchase.
• Which items would you buy more of if the
prices were lower?
• Which items would you buy less of if the prices
were higher?
• For which items are there substitutes?
• Do any of your purchases have a complement?
Of Demand
Elasticity of Demand
The relationship between the
percentage change in quantity
demanded and the percentage
change in price.
Elastic Demand
% change in Qd > % change in P
Inelastic Demand
% change in Qd < % change in
price
Unit Elastic Demand
% change in Qd = % change in P
Factors that Determine Elasticity
Goods May Be More Elastic When:

Number of Substitutes

Luxuries v. Necessities

% of Income Spent On the Good

Time
Complete Ch3 Demand H/O
So what?

Elasticity of Demand Affects
TOTAL REVENUE
( SOMETHING BUSINESSES CARE VERY MUCH ABOUT)
For your scenario, determine if demand is elastic, inelastic
or unit-elastic. Also determine change in revenue.
In the first week, Javier sold 100 basketballs for $20.00
each. What was his total revenue?
#1 The second week,he
#2
#3
#4
The second week, he
raised the price of
lowers price to $18.00. He
basketballs to $22.00. What then sold 130.
was % change? He then sold
Total Revenue, week 2?
75 bbls? % change? What
Change in revenue?
was his total revenue in the
second week?
Elasticity?
Change in revenue?
Elasticity?
The second week, he
raises price to #22.00. He
then sold 95.
Total revenue?
Change in revenue?
The second week, he
lowers price to $18.00. He
then sells 105.
Total revenue?
Change in revenue?
Homework


Section Review p. 84 # 2-4
Read p. 85-Developing Economic
Skills:
“Thinking the Ceteris Paribus Way;
or, It’s Never Too Late To Learn Some
Latin”
Write a short answer to the Question to
Answer
The Relationship Between Elasticity
and Total Revenue