Elasticity and Revenue

This video illustrates a popular application of the concept of elasticity, namely the relationship between elasticity of demand and changes in revenue resulting from a price change.

For more information and a complete set of microeconomics videos, see
http://www.economistsdoitwithmodels.com/microeconomics-101

by Economists Do It With Models

Category:

Education

Tags:

• economics
• microeconomics
• elasticity
• revenue

[bryanwalsh1868]

So, is the inverse of these true if you decrease price in elastic or inelastic markets?

[jodiecongirl]

@bryanwalsh1868 If you face elastic demand and you decrease price, you will increase revenue since the quantity increase more than makes up for the price decrease. If you face inelastic demand and you decrease price, you will decrease revenue since you won't have increased the quantity demanded enough to offset the lower price.

[shinenot]

Great video, Jodie. Thanks.

[kapilmails]

Thank you so much!!

You are the best (and most beautiful) teacher out there on Web.

I am done wth this video.. but watched all since start.. my syllabus has only this.

But hats off to you .. for helping out people like us..

[birdwell455]

Awesome videos, im a student at University of Texas El Paso. Hopefully i pass my CLEP exam tomorrow Thank you for the help : )

[2durwz]

@zenasf

yes it did. thanks :)

[zenasf]

@2durwz on a single line there is a point where you will no longer maximize revenue by lowering price to maximize quantity. that immediate point is called unit elasticity below that point where you start to lose total revenue would be inelastic because the market is not responding well to your change of price. to put it simply, a line is elastic until a certain point and then becomes inelastic. hope that helps

[2durwz]

How can a single straight line represent both elastic and inelastic sections?

isnt the inelastic curve supposed to be more steeper than the elastic one ?

I dont get the logic......some1 plzzz explain

[geraniumpratense]

What if the price goes up with 200% and the demand goes down with 100%? It is a situation of inelastic demand, but the revenue will not increase! :D

[Officialicy]

Instead of learning I'm lost in your beauty =/ FML

[cinqueottavi]

you are much better then my MBA Dr. Professor !!!

[angelawingki]

yr pretty and yr smart.... awww im jealous :(