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The Price Elasticity of Demand.
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Book price $12 $10 $5 Relationship Between Price and Quantity Demanded Quantity of books sold 720 800 1 ,ooo.
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Demand Curve 14 12 10 200 400 600 800 1000 1200 Number of Books Demanded.
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Perfectly Inelastic Demand and Perfectly Elastic Demand Perfectly inelastic demand Perfectly elastic demand Quantity Demanded.
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Elasticity Varies Along a Straight-Line Demand Curve Elastic region (elasticity > 1) Unit elasticity (elasticity = 1) Inelastic region (elasticity < 1) Quantity Demanded.
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Changing the Scale of Demand Curve 14 12 10 700 800 900 1000 1100 Number of Books Demanded.
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O Braeburn's Book Revenues 14 12 10 6 200 400 600 800 1000 Number of Books Demanded 1200.
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Effects of Price Changes on Revenues Elasticity value (e) Elasticity description Perfectly inelastic Inelastic Unit elastic Elastic Perfectly elastic Effect of a price increase on revenues Increase Increase No change Decrease Revenues fall to zero Effect of a price decrease on revenues Decrease Decrease No change Increase Decrease.
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Some Estimated Price Elasticities of Demand Price elasticity of demand Good or service Cigarettes Gasoline Residential water Air travel Soft drinks Eggs Rice Low range 0.4 (developed countries) 0.1 (short term) 0.1 (lower estimates) 0.3 (first-class travelers) 0.8 (soft drinks in general) 0.1 (United States) 0.3 (United States) High range 0.8 (developing countries) 0.3 (long term) 0.7 (higher estimates) 1.4 (pleasure travelers) 4.4 (specific drink brands) 0.6 (South Africa) 0.8 (China).