Temple University

Economics 51 and 52

Demand Elasticity

The demand curve for Valentine's Day cards is shown below:

The picture is drawn to scale. That is, using your ruler carefully, you can find X,Y coordinates from the picture.

Name:

Social Security Number:

1. What is total revenue when Price = 3?

6

2. What is the elasticity of demand if price is raised from P = 1 to P = 2?

elasticity=-1/3

3. What is the elasticity of demand if price is lowered from P = 2 to P = 1?

elasticity=-1

4. What is the change in total revenue when price is
changed from  P = 1 to P = 2?

When P=1, TR=6.  When P=2, TR=8.  If we raise price then TR goes up, suggesting that we are in the inelastic protion of the demand curve.

5. Is your result in question 4 consistent with
your result in question 2? (Yes or No)

YES

  

Hint: The price elasticity of demand is

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