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PRICE ELASTIC - %CHANGE IN QTY > % CHANGE IN PRICE
ABSOLUTE VALUE > 1
eg.25%/-10% = -2.5

PRICE INELASTIC - % CHANGE IN PRICE > % CHANGE IN QTY
ABSOLUTE VALUE < 1
eg.-10%/25% = -0.4

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Price elasticity along the straight line demand curve differs at different segments as the price decreases and quantity increases along the line.

At the upper end of the demand curve, the demand is more price elastic. The absolute value, |Ed| is above 1 as the percentage change in quantity is greater than the percentage change in price. When demand is more price elastic, a decrease in price will bring about a larger proportionate increase, so the total revenue will increase. When demand is more price elastic, an increase in price will bring about a larger proportionate decrease, so the total revenue will decrease. For example, the price of an Adidas bag decrease from $100 to $75, and the quantity sold increased from 100 to 200. Ed= 66.67%/-28.57%= -2.33. |Ed| = 2.33 which is greater than 1.

At the mid-point of the demand curve, the demand is unit elastic. The absolute value at the mid-point is 1. This is because the percentage change in quantity is  the same as the percentage change in price. When the demand is unit elastic, a decrease in price will bring about the same proportionate increase in quantity and an increase in price will bring about an exact proportionate decrease in quantity and hence the total revenue will not change and remains at the maximum.

At the lower end of the demand curve demand is less price elastic. The absolute value |Ed| is   less than 1 as  the percentage change in quantity is lesser than percentage change in price. When demand is price inelastic, a decrease in price will bring about a smaller proportionate increase, so the total revenue will decrease. When demand is price inelastic, an increase in price will bring about a smaller proportionate decrease, hence the total revenue will increase. For example, the price of salt increases from $2 to $3 and the quantity sold decreases from 10 to 9. Ed=-10.53/40=-0.26325 |Ed| = 0.26325 which is less than 1.

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Sharma's Answer to Micro Economics Question 6 Tutorial 4.

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Sharma's Answer to Micro Economics Question 6 Tutorial 4.

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At the top end of the demand curve, the demand is more price elastic as the %change in quantity is > % change in price. When the demand is more elastic, a decrease in the price will result in a larger change in proportions, thus the total revenue will increase.

At the lower end of the curve, Demand is less price elastic as the % change in quantity is lesser than change in price. So, when it is inelastic, a decrease in price will bring about a smaller change resulting in the decrease of total revenue.

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Dann's Answer to MIEC Tutorial 4 Question 6

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Dann's Answer to MIEC Tutorial 4 Question 6

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Price elasticity along the straight line differs at different segments of the price elasticity of demand line as the price is decreasing along the line while having the quantity increasing.

As at the upper end, it is price elasticity of demand, as the percentage of price decrease is less than the percentage increase in quantity, hence, the total revenue increases as the consumer gets to buy more products at a lower price, therefore increasing total revenue.

At the midpoint of the price elasticity of demand curve, it is unit elastic, thus total revenue = 0 as the percentage decrease in price is equals to the percentage decrease in quantity.

At the lower end of the price elasticity of demand curve, it is price inelastic of demand and the total revenue decreases. This is because the percentage decrease in price is more than the percentage increase in quantity. Hence despite the consumer is able to buy more quantities at a cheaper price, the total revenue he earns decreases as there is lesser quantity bought by the consumer/buyer

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elasticity of demand falls steadily down the demand curve where the absolute value falls from above 1 to below 1. This will cause the firm’s total revenue to decrease up till a certain point and stay constant (inelastic) below the midpoint of the demand curve where to absolute value of the price elasticity of demand is below an absolute value of 1.

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Mark's Answer to MIEC tutorial 4 Question 6 

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Mark's Answer to MIEC tutorial 4 Question 6 

# data[].attributes.body
At the upper end of the demand curve, demand is more price elastic, as percentage change in quantity is greater than percentage change in price. When demand is more price elastic, a decrease in price will bring about a larger proportionate increase, so the total revenue will increase. When demand is more price elastic, an increase in price will bring about a larger proportionate decrease, so the total revenue will decrease.

At the mid-point of the demand curve, the demand is unit elastic. The percentage change in quantity is  the same as the percentage change in price. When the demand is unit elastic, a decrease in price will bring about the same proportionate increase in quantity and an increase in price will bring about an exact proportionate decrease in quantity and hence the total revenue will not change and remains at the maximum

At the lower end of the demand curve, demand is less price elastic, as the percentage change in quantity is lesser than percentage change in price. When demand is price inelastic, a decrease in price will bring about a smaller proportionate increase, so the total revenue will decrease. When demand is price inelastic, an increase in price will bring about a smaller proportionate decrease, hence the total revenue will increase.