Elasticity Part 2
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Lesson Summary:
In this lesson on elasticity, students will learn how to compute the elasticity of a commodity at any price given the demand function. They will then use the elasticity function to find the maximum revenue and corresponding price/quantity of the commodity. By understanding the relationship between elasticity and revenue, students will be able to predict how changes in price will affect demand, and thus make informed decisions about pricing strategies.
Lesson Description:
Be able to compute the elasticity of a commodity at any price given the demand function. Use the elasticity function to find the maximum revenue and corresponding price/quantity of the commodity.
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Additional Resources:
- Notes - Notes on Elasticity
- Elasticity slides - Slides from the video on Elasticity
Questions answered by this video:
- What is elasticity?
- How does elasticity relate to maximum revenue?
- How do price, revenue, and elasticity relate to each other?
- If you change price, how does it affect demand, revenue, and elasticity?
- What is the formula for maximum revenue?
- Why does E = 1 at the maximum revenue point?
- What does it mean for a product to be inelastic?
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Staff Review
This lesson continues the concepts from the previous lesson. The relationships between price, revenue, and elasticity are explained in this lesson. You will learn how to maximize revenue for a product.
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