Elasticity of Demand

Questions you will be able to answer:

  1. What impact does price have on demand?
  2. How can we measure the impact a price increase or decrease will have on demand?
  3. How can decision makers use this information?

Elasticity of Demand

Coefficient of demand = (% change in demand / % change in price)

Inelastic demand: Coefficient of demand < 1

Elastic Demand: Coefficient of demand > 1

Unitary Demand: Coefficient of demand = 1

Additional Practice and Review
Read Pages 95-97
Check Your Understanding 1-4