Elasticity and its applications

Figure 1 The Price Elasticity of Demand (1)
(a) Perfectly inelastic demand: Elasticity equals 0
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Figure 1 The Price Elasticity of Demand (2)
(b) Inelastic demand: Elasticity is less than 1
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Figure 1 The Price Elasticity of Demand (3)
(c) Unit elastic demand: Elasticity equals 1
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Figure 1 The Price Elasticity of Demand (3)
(d) Elastic demand: Elasticity is greater than 1
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Figure 1 The Price Elasticity of Demand (4)
(e) Perfectly elastic demand: Elasticity equals infinity
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Figure 2 Total Expenditure
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Figure 3 How Total Expenditure Changes When Price Changes: Inelastic Demand
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An increase in price from €1
to €3 …
… leads to an Increase in total revenue from €100 to €240
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Figure 4 How Total Expenditure Changes When Price Changes: Elastic Demand
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An increase in price from €4
to €5 …
… leads to an decrease in total revenue from €200 to €100
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Figure 5 Elasticity of a Linear Demand Curve
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Figure 6 The Price Elasticity of Supply (1)
(a) Perfectly inelastic supply: Elasticity equals 0
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0
Price
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Figure 6 The Price Elasticity of Supply (2)
(b) Inelastic supply: Elasticity is less than 1
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0
Price
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Figure 6 The Price Elasticity of Supply (3)
(c) Unit elastic supply: Elasticity equals 1
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Price
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Figure 6 The Price Elasticity of Supply (4)
(d) Elastic supply: Elasticity is greater than 1
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Price
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Figure 6 The Price Elasticity of Supply (5)
(e) Perfectly elastic supply: Elasticity equals infinity
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Figure 7 How the Price Elasticity of Supply Can Vary
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Figure 8 An Increase in Supply in the Market for Chips
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chips
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Price of
chips
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Table 1 Prices of 7-night Ski Holidays in Austria, from London
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Figure 9 The Supply of Ski Holidays in Europe
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