1. Today’s Warm Up

3. Calculating Elasticity – A refresher…
Calculate elasticity for two points on a demand curve, point A and point B. For the sake of plugging these points into the formula, assume point A = (Q1, P1) and point B = (Q2, P2).
A: Price = $4 Qty = 120
B: Price = $6 Qty = 80
Calculate elasticity AGAIN, this time making point B = (Q1, P1) and point A = (Q2, P2).
What do you notice?

4. Stretch your legs!
Grab two different color highlighters or light color markers.

6. Total Revenue (TR) = Price x Quantity Sold
TR = P x Q
How does TR change as we move along the demand curve?
Depends on elasticity!!!

9. Recalculate elasticity using our new formula 
Calculate elasticity for two points on a demand curve, point A and point B. For the sake of plugging these points into the formula, point A = (Q1, P1) and point B = (Q2, P2).
A: Price = $4 Qty = 120
B: Price = $6 Qty = 80
Calculate elasticity AGAIN, this time making point B = Q1 and point B = Q2.
What do you notice now????