Price Elasticity of Demand – AP Microeconomics | ShowMeClass

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Price Elasticity of Demand

AP Microeconomics · Unit 2: Supply & Demand

Learning Objectives

Calculate price elasticity of demand

Classify elastic, inelastic, unit elastic

Relate elasticity to total revenue

Understand midpoint method

Formula

|E_d| > 1: Elastic (sensitive)
|E_d| = 1: Unit elastic
|E_d| < 1: Inelastic (insensitive)

Revenue Relationship

Elastic: ↓P → ↑TR
Inelastic: ↓P → ↓TR
Unit elastic: ↓P → TR unchanged

TR = P × Q

Colors

Demand curve

Elastic region

Inelastic region

Unit elastic point

Total revenue

ElasticityRevenueDemand

Price:-

Quantity:-

|E_d|:-

TR:-

TOTAL REVENUE vs QUANTITY

Price Point ($) 50

Demand Intercept (a) 100

Demand Slope (b) 1.0

Curve Type

Display

Elasticity Analysis

Quick Quiz▼

1. If |E_d| = 2.5, demand is:

Perfectly inelastic Inelastic Elastic Unit elastic

2. If demand is inelastic, raising price will:

Increase total revenue Decrease total revenue Keep TR the same Can't determine

3. On a linear demand curve, elasticity at the midpoint is:

0 1 (unit elastic) Infinity 0.5