26. P
QO 40
20
100
D
8
a
b
Unit elastic demand (Unit elastic demand (PP∈∈DD = -1)= -1)
As price changes, total
consumer expenditure
(i.e. firms’ revenue)
remains the same.
27. Different elasticities along different portions of a demand curveDifferent elasticities along different portions of a demand curve
P
QO
P1
Q1
a
D
28. Different elasticities along different portions of a demand curveDifferent elasticities along different portions of a demand curve
P
QO
P1
P2
Q1 Q2
a
b
D
Elastic
demand
29. Different elasticities along different portions of a demand curveDifferent elasticities along different portions of a demand curve
P
QO
P1
P2
P3
Q1 Q2
Q3
a
b
c
D
Inelastic
demand
31. Measuring elasticity at a pointMeasuring elasticity at a point
P
Q
0
D
r
Pεd = (1 / slope) x P/Q
32. P
Q
50
30
0 40 100
D
r
Pεd = (1 / slope) x P/Q
Measuring elasticity at a pointMeasuring elasticity at a point
33. P
Q
50
30
0 40 100
D
r
Pεd = (1 / slope) x P/Q
= −100/50 x 30/40
Measuring elasticity at a pointMeasuring elasticity at a point
34. P
Q
50
30
0 40 100
D
r
Pεd = (1 / slope) x P/Q
= −100/50 x 30/40
= −60/40
Measuring elasticity at a pointMeasuring elasticity at a point
35. P
Q
50
30
0 40 100
D
r
Pεd = (1 / slope) x P/Q
= −100/50 x 30/40
= −60/40
= −1.5
Measuring elasticity at a pointMeasuring elasticity at a point
36. Different elasticities along a straight-line demand curveDifferent elasticities along a straight-line demand curve
P
Q
Demand
0
2
4
6
8
10
0 10 20 30 40 50
n
m
l
k
Pεd = (1 / slope) x P/Q
37. Different elasticities along a straight-line demand curveDifferent elasticities along a straight-line demand curve
P
Q
Demand
0
2
4
6
8
10
0 10 20 30 40 50
n
m
l
k
Pεd = (1 / slope) x P/Q
(1 / slope) is constant
= −50/10 = −5
38. Different elasticities along a straight-line demand curveDifferent elasticities along a straight-line demand curve
P
Q
Demand
0
2
4
6
8
10
0 10 20 30 40 50
n
m
l
k
Pεd = (1 / slope) x P/Q
(1 / slope) is constant
= −50/10 = −5
But P/Q varies:
at n, P/Q = 8/10
39. Different elasticities along a straight-line demand curveDifferent elasticities along a straight-line demand curve
P
Q
Demand
0
2
4
6
8
10
0 10 20 30 40 50
n
m
l
k
Pεd = (1 / slope) x P/Q
(1 / slope) is constant
= −50/10 = −5
But P/Q varies:
at n, P/Q = 8/10
at m, P/Q = 6/20
at l, P/Q = 4/30
41. Proportionate (or %) ∆QD
Proportionate (or %) ∆P
The mid-point formula for
measuring price elasticity of supply
42. ÷
Proportionate (or %) ∆QD
Proportionate (or %) ∆P
∆QD
QD
∆P
P
The mid-point formula for
measuring price elasticity of supply
43. ÷
Proportionate (or %) ∆QD
Proportionate (or %) ∆P
∆QD
QD
∆P
P
÷
∆QD
mid QD
∆P
mid P
The mid-point formula for
measuring price elasticity of supply
44. Supply curves with different price elasticity of supplySupply curves with different price elasticity of supply
P
QO
P0
Q0
S1
45. Supply curves with different price elasticity of supplySupply curves with different price elasticity of supply
P
QO
P0
Q0
S2
S1
46. Supply curves with different price elasticity of supplySupply curves with different price elasticity of supply
P
QO
P1
P0
Q0
Q1
S2
S1
47. Supply curves with different price elasticity of supplySupply curves with different price elasticity of supply
P
QO
P1
Q2
P0
Q0
Q1
S2
S1
