Price elasticity of demand Essay Example | Topics and Well Written Essays - 500 words

Price elasticity of demand - Essay ExampleThe resulting coefficient for such is great than 1 (Ed 1). In addition, the result of a decrease in the equipment casualty of the good is also an maturation in its fare tax revenue, otherwise, a decrease in its total revenue. (Price Elasticity) Therefore, an increase in the prices of apples in the market will give a corresponding decrease in the total revenue of the good. This only means that if the price of apples is increased, consumers may decide not to buy the good any longer. However, if the price of apples decreases, people will tend to buy more apples. It is also possible that the consumer will just fork out to find an alternative fruit instead that is cheaper than apples.On the other hand, if the counterchange in quantity demanded of the crossroad along with its price is less than 1 (Ed 1), the product is said to be inelastic. In this condition, the percentage change in quantity demanded is less than the percentage change i n price. Unlike the elastic good, inelasticity means that a decrease in price will result in a decrease in total revenue and vice versa. (Price Elasticity) Inelastic products are basically the products that belong to the basic take of man. One example of an inelastic product would be the salt wherein even a large increase in its price, the demand would remain the same therefore there will be a congeneric increase in its total revenue.