Purchase Solution

Price elasticity of demand

Not what you're looking for?

Ask Custom Question

What is the definition of price elasticity of demand? Explain the relationship between price elasticity and total revenue? How does price elasticity of demand affect a firm's pricing decisions? How does the availability of substitutes affect price elasticity of demand? Provide examples using both graphs and numeric examples. Just need help with the graphs

Purchase this Solution

Solution Summary

Price elasticity of demand as it relates to total revenue; pricing decisions; and availability of substitutes. Graphs provided.

Solution Preview

Price elasticity of demand tells us the proportion by which the quantity demanded changes with a change in price. For example, if the percentage change in price is greater than the percentage change in quantity demand, the good is said to be price inelastic. Very elastic goods, on the other hand, are those for which consumers will not tolerate price increases.

This is obviously critical in pricing decisions. If consumers are all ...

Purchase this Solution


Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.