Agenda
- Total Revenue and elasticity
- Draw the demand curve and identify elastic region, inelastic region and unit elastic regions
- Profits and revenue
- Numericals
Sale of Movie Theater
| Price * Sale |
Revenue |
| 8 * 100 |
800 |
| 7 * 200 |
1400 |
| 6 * 300 |
1800 |
| 5 * 400 |
2000 |
| 4 * 500 |
2000 |
| 3 * 600 |
1800 |
| 2 * 700 |
1400 |
| 1 * 800 |
800 |
As the price decreases:
- Elastic region : Ed > 1 ⇒ profit increases
- Unit Elastic : Ed = 1 ⇒ profit constant
- Inelastic : Ed < 1 ⇒ profit decreases
Numerical
product X
Q = 2000 - 20P
- Q = 2000 - 20 (10) ⇒ 1800