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Homework answers / question archive / Define elastic, inelastic, and unitary elasticity
Define elastic, inelastic, and unitary elasticity. How are these related to total revenue?
The amount of the slope of the downward-sloping demand curve is related to the concept of elasticity. A nearly vertical curve means demand is inelastic, or there is not much response in quantity demanded when the price changes. The coefficient of elasticity is less than 1. A nearly horizontal curve means demand is elastic, and there is a strong response in quantity to a change in price. The coefficient of elasticity is more than 1. Unitary elasticity means that the coefficient of elasticity is exactly 1.
Another way to think about elasticity is in terms of total revenue. Here are the rules: