2. The Elasticity of Demand (Own-Price)
What does the demand elasticity tell us
Demand is elastic
Elasticity > |1| (< -1)
% Change in Qty Demanded is very price responsive
Small increases -> large decreases in Qd and Revenues
Small decreases -> large increases in Qd and Revenues
Demand is unit elastic
Elasticity = |1| (=-1)
% change in Qd = % change in price -> no change in Revenues with price increases or decreases
Demand is inelastic
Elasticity < |1| (-1 < έ < 0)
% Change in Qty Demanded is not very price responsive
Increases in price -> little change in Qd and larger increases in Revenu
Decreases -> little change in Qd and decreases in Revenues

3. Elasticity and Total Revenue
Unit elastic