Price
per
unit |
Quantity
Demanded |
Total Outlay
(or Total Revenue)
$ |
|---|
| 1.00 | 1,000 |
$1,000 |
| 2.00 | 900 |
|
| 3.00 | 800 |
$2,400 |
| 4.00 | 700 |
$2,800 |
| 5.00 | 600 |
$3,000 |
| 6.00 | 500 |
$3,000 |
| 7.00 | 400 |
$2,800 |
| 8.00 | 300 |
$2,400 |
| 9.00 | 200 |
$1,800 | |
Consider the following table to your left.
As price change from $1 per unit to $2 per unit, total outlays (total revenue) rises
from $1,000 to $1,800. Total outlays and price have both risen. Economists say
the demand for this good, in this price range is inelastic, and that the
good has price elasticity of less than 1, in this price range.
A given percentage change in price has resulted in a lesser percentage change in
quantity demanded. Price has doubled; that is increased by 100% : (from $1 to $2).
However, the quantity demanded has only fallen by 100, on a base demand of 900 units.
This is a decrease of only 100 / 900 = 11%
|
