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Price elasticity of demand (PED)
200211-10-Q6
A manufacturer progressively reduces the price of his product in an attempt to increase total revenue.
The table shows the outcome of this policy.
答案:
分析Analysis
Notice total revenue does not vary with the prices, thus PED must be unitary ($PED=1$), meaning proportionate changes between price and quantity demanded, i.e. a 1 percent increase in prices is associated with 1 percent decrease in quantity demanded
注意total revenue不随着price改变,所以PED必然等于1. price提高1%伴随着quantity demanded降低1%, 对total revenue的影响正好抵消
perfectly inelastic means $PED=0$; relatively inelastic: $PED < 1$; perfectly elastic: $PED = \infty$
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