Interpreting Elasticity Flashcards
If the result of the elasticity calculation is over 1…
The product is elastic (responsive)
If the result of the elasticity calculation is under 1…
The product is inelastic (unresponsive)
If the result of the elasticity calculation is exactly 1…
Response of sales is equal to the change
If the result of the elasticity calculation is 0
The sales of the product will not change in relation to the intended change
If the result of the elasticity calculation is below 0
Sales will decrease as a result of the change
What is meant by the term elastic?
Where the change in demand that results from a price change is greater than the change that caused it
What is meant by the term inelastic?
Where the change in demand that results from a price change is less than the change in price that caused it
