Elasticities Flashcards
1
Q
Formula for elasticity
A
Percentage change in quantity divided by percentage change in price
2
Q
Perfectly inelastic graph
A
Line goes straight up from the middle. Equal to 0
3
Q
Relatively inelastic
A
Line goes straight down from left to right but it’s centred in the middle. <1
4
Q
Unit elastic
A
Line goes left to right but it’s centred in the middle and a little bit further down the relatively inelastic. 1
5
Q
Relatively elastic
A
Line is almost drawn in the middle and centred. >1
6
Q
Perfectly elastic
A
Line is drawn straight through the middle. Goes on for infinity
7
Q
Price elasticity of demand -
A
Price elastic increase revenue
Unit elastic doesn’t change revenue
Price inelastic decreases revenue
