- Economics 7

2/10/25 Price Elasticity of Demand (PED) notebook

Total revenue is shown by…

the area under the demand curve

List the five types of elasticity

• Perfectly Inelastic

• Price Inelastic Demand

• Unitary Elastic

• Price Elastic Demand

• Perfectly Elastic Demand

What effect does Perfectly Inelastic (Elasticity) have on Demand

Price change has NO EFFECT on Demand

What is the modulus of number (gradient) for Perfectly Inelastic Demand

Perfectly Inelastic Demand : 0

Draw the demand curve for Perfectly Inelastic Demand

Straight vertical line

For Perfectly Inelastic PED ;

If price increases, TR (total revenue) will _____

If price decreases, TR (total revenue) will _____

If price increases, TR (total revenue) will increase

If price decreases, TR (total revenue) will decrease

What effect does Price Inelastic (Elasticity) have on Demand

Demand changes by proportionately LESS THAN Price.

What is the modulus of number (gradient) for Price Inelastic Demand

Price Inelastic Demand : between 0 and 1 (ignore negatives)

Draw the demand curve for Price Inelastic Demand

Very steep downwards slope

For Price Inelastic Demand PED ;

If price increases, TR (total revenue) will _____

If price decreases, TR (total revenue) will _____

If price increases, TR (total revenue) will increase

If price decreases, TR (total revenue) will decrease

What effect does Unitary Elastic (Elasticity) have on Demand

PROPORTIONATE change in Demand to Price.

What is the modulus of number (gradient) for Unitary Elastic

Unitary Elastic Demand : 1

Draw the demand curve for Unitary Elastic Demand

Constant downwards slope

For Unitary Elastic PED ;

If price increases, TR (total revenue) will _____

If price decreases, TR (total revenue) will _____

If price increases, TR (total revenue) will stay the same (constant)

If price decreases, TR (total revenue) will stay the same (constant)

What effect does Price Elastic (Elasticity) have on Demand

Demand changes by proportionately MORE than price.

What is the modulus of number (gradient) for Price Elastic Demand

Price Elastic Demand : above 1

Draw the demand curve for Price Elastic Demand

Steep downwards slope

For Price Elastic Demand PED ;

If price increases, TR (total revenue) will _____

If price decreases, TR (total revenue) will _____

If price increases, TR (total revenue) will decrease

If price decreases, TR (total revenue) will increase

What effect does Perfectly Elastic (Elasticity) have on Demand

Price change has an INFINITE change on Demand

What is the modulus of number (gradient) for Perfectly Elastic Demand

Perfectly Elastic Demand : Infinite ∞

Draw the demand curve for Perfectly Elastic Demand 

Straight horizontal line

For Perfectly Elastic PED ;

If price increases, TR (total revenue) will _____

If price decreases, TR (total revenue) will _____

If price increases, TR (total revenue) will fall to zero

If price decreases, TR (total revenue) will fall to zero