1 / 7

Economics Presentation

Learn about the elasticity of demand for ABC Detergent as the price changes, different types of price elasticity, and methods to calculate elasticity and increase total revenue by pricing based on demand.

jdoris
Download Presentation

Economics Presentation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Economics Presentation

  2. The Elasticity of Demand ABC Detergent

  3. A DEMAND SCHEDULE FOR ABC DETERGENT PRICE/UNIT ($) QUANTITY 10 1000 20 700 500 30 250 40

  4. The Method to find out the elasticity of demand for ABC detergent if the price increases from $20 to $30: 1/. The original price method (500-700) / (30-20) X 20/700 Ed = -|0.57| (Corr. 2 s.f) 2/. The average price and quantity method (500-700) (30+20) / 2 ------------ X ----------------- (30-20) (500+700) /2 Ed = -|0.83|(Corr. 2 s.f)

  5. Since Ed< 1, therefore the elasticity of demand for ABC detergent is INELASTIC. DIFFERENT TYPES OF PRICE ELASTICITY: Elastic : Ed > 1 Inelastic : Ed < 1 Unitarily elastic : Ed = 1 Perfectly inelastic : Ed = 0 Perfectly elastic: Ed = infinitive

  6. How to increase total revenue for ABC Detergent?? Price $ • Inelastic demand • If price increase, • =>% Increase in price > % decrease in Qd • Gain > Loss • Total Revenue increase P2 P1 GAIN LOSS Qd/period

  7. THE END

More Related