Price Elasticity of Demand
AP Microeconomics · Flashcards · Application
AP MICROECONOMICS · FLASHCARDS
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QUESTION
Find the effect on revenue if demand is unitary elastic and price changes.
QUESTION
Calculate elasticity: Price increases 5%, quantity decreases 2%.
QUESTION
Identify the elasticity if
E
d
=
1.5
E_d = 1.5
E
d
=
1.5
.
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ANSWER
Demand is elastic. Since
∣
1.5
∣
>
1
|1.5| > 1
∣1.5∣
>
1
, demand responds strongly to price.
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