Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

4. Elasticity

Elasticity Summary

Microeconomics

4. Elasticity

Elasticity Summary

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Multiple Choice

An increase in the supply of a good will increase the total revenue producers receive if:

The demand curve is inelastic

The demand curve is elastic

The supply curve is inelastic

The supply curve is elastic

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Verified step by step guidance

Understand the concept of elasticity: Elasticity measures how much the quantity demanded or supplied responds to changes in price. If demand is elastic, a small change in price leads to a large change in quantity demanded.

Analyze the relationship between supply and demand: When supply increases, the quantity available in the market increases, which typically leads to a decrease in price.

Consider the effect of elasticity on total revenue: Total revenue is calculated as price multiplied by quantity. If demand is elastic, a decrease in price leads to a proportionally larger increase in quantity demanded, potentially increasing total revenue.

Evaluate the impact of an elastic demand curve: With an elastic demand curve, the percentage change in quantity demanded is greater than the percentage change in price, meaning total revenue can increase even if the price decreases.

Conclude that an increase in supply will increase total revenue if the demand curve is elastic: This is because the increase in quantity demanded due to the lower price outweighs the decrease in price, leading to higher total revenue.