📈Price elasticity measures how quantity responds to price changes
⛽Gasoline has inelastic demand due to few substitutes
🔄Elastic demand occurs with many substitutes or luxury goods
#️⃣Elasticity coefficient less than 1 signifies inelastic demand
💰The total revenue test helps determine demand elasticity
What is price elasticity?
—Price elasticity measures how sensitive quantity is to a change in price.
Why does gasoline have inelastic demand?
—Gasoline has few substitutes, making consumers less responsive to price changes.
When does elastic demand occur?
—Elastic demand occurs when quantity is sensitive to price changes due to many substitutes or luxury status.
What does an elasticity coefficient less than 1 indicate?
—An elasticity coefficient less than 1 signifies inelastic demand.
How does the total revenue test determine demand elasticity?
—The total revenue test examines the relationship between price changes and total revenue to determine if demand is elastic or inelastic.
00:00Price elasticity measures how quantity responds to price changes.
00:33Gasoline has inelastic demand due to few substitutes.
02:14Elastic demand occurs with many substitutes or luxury goods.
03:41An elasticity coefficient less than 1 signifies inelastic demand.
05:17The total revenue test examines the relationship between price changes and total revenue to determine if demand is elastic or inelastic.
