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Introduction 18/04/20132  One important problem in business is to determine the effect on revenue of a change in the price of a good.  If the firm lowers.

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Presentation on theme: "Introduction 18/04/20132  One important problem in business is to determine the effect on revenue of a change in the price of a good.  If the firm lowers."— Presentation transcript:

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2 Introduction 18/04/20132  One important problem in business is to determine the effect on revenue of a change in the price of a good.  If the firm lowers the price then it will receive less for each item, but the number of items sold increases.  The crucial factor here is not the absolute changes in P and Q but rather the proportional or percentage changes.

3 Types of Elasticity 18/04/20133  If the percentage rise in Q is greater than the percentage fall in P then the firm experiences an increase in revenue. Under these circumstances we say that demand is elastic.  Demand is said to be inelastic if demand is relatively insensitive to price changes. In this case, the percentage change in quantity is less than the percentage change in price.  If the percentage changes in price and quantity are equal, leaving revenue unchanged. We use the term unit elastic to describe this situation.

4 Price elasticity of demand 18/04/20134

5 Rumus Elastisitas 18/04/20135

6 Next 18/04/20136

7 Example 18/04/20137

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11 18/04/201311

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18 Price elasticity of supply 18/04/201318

19 Example 18/04/201319

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21 18/04/201321

22 Latihan Soal 18/04/ Find the price elasticity of demand at P = 6 for each of the following demand functions

23 Latihan Soal (2) 18/04/ Consider the supply equation

24 Stop!! 18/04/  Minggu depan bisa dibaca: “Optimization of economic functions”


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