Principles of Microeconomics / Unit 17 MIC 1610 short lesson, about 20 seconds
Elasticity, Restated
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The idea
Price elasticity of demand is the percentage change in quantity over the percentage change in price, by the midpoint or arc method. Substitutes, budget share and time make demand elastic; revenue rises with price only where demand is inelastic.
In practice
Fares up and revenue down means demand was elastic.
Where people slip
Elasticity is not slope; a straight demand curve is elastic above its midpoint.
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