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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Explain how a seller can determine whether the demand for his or her good is inelastic, elastic, or unit elastic between two prices.

To determine

Identify the demand elasticity between prices.

Explanation

The demand elasticity of a commodity can be identified through the variations in the total revenue (TR) as per the changes in price. If the TR of a commodity increase between two prices, then the commodity has an inelastic demand. As per the changes in price, if the TR declines or remains as constant, then the demand will be elastic and unit elastic, respectively.

Concept

Elasticity of demand: Elasticity of demand refers to the responsiveness or the change in quantity demanded due to the change in price.

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