Introduction

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One important problem in business is to determine theeffect on revenue of a change in the price of a good.

If the firm lowers the price then it will receive less foreach item, but the number of items sold increases.

The crucial factor here is not the absolute changes in Pand Q but rather the proportional or percentage changes.

Types of Elasticity

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If the percentage rise in Q is greater than the percentagefall in P then the firm experiences an increase in revenue.Under these circumstances we say that demand iselastic.

Demand is said to be inelastic if demand is relativelyinsensitive to price changes. In this case, the percentagechange in quantity is less than the percentage change inprice.

If the percentage changes in price and quantity are equal,leaving revenue unchanged. We use the term unit elasticto describe this situation.

Price elasticity of demand

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Rumus Elastisitas

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Next

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Example

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Price elasticity of supply

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Example

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Latihan Soal

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1. Find the price elasticity of demand at P = 6 for eachof the following demand functions

Latihan Soal (2)

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2. Consider the supply equation

Stop!!

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Minggu depan bisa dibaca:“Optimization of economic functions”