The following table shows part of the demand for tickets to a local sporting event:
Is demand elastic in the $3 - $6 price range?
Ed = 0.8 in the $6 - $10 price range. In this range of demand, by what percentage would quantity demanded change if price changes by 5 percent?
Price falls from $15 to $10. Does total revenue (TR) increase, decrease, or remain the same?
"Price elasticity of demand is a measure of the percentage change in the quantity of a good demanded divided by the percentage change in its price. "(thetimes100, 2009)
We can show this in a simple formula:
Price elasticity demand = percentage change in quantity demanded divided by percentage change in the price of the goods
Hence PEoD = (% ...
This solution defines elasticity and explains with calculations and answers how to determine if demand is elastic, the percentage quantity demanded would change if price changes and the change in total revenue.