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Total Revenue Test (for Price Elasticity of Demand)

Total Revenue Test (for Price Elasticity of Demand) Use the total revenue test: at a price of $3, 8 units are sold so TR=24. At a price of $2, 9 units are sold so TR=$18. As price went down, so did TR, so demand is inelastic from A to B. You could also think about going from $2 to $3 and having TR go up when price goes up and still get inelastic.

If you want to calculate the elasticity from A to B, your percentage change is quantity is -2/17 and percentage change in price is 2/5, leading to an elasticity of -5/17 which is inelastic.

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