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

Total Revenue Along a Linear Demand Curve

Microeconomics

4. Elasticity

Total Revenue Along a Linear Demand Curve

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Multiple Choice

What is the elasticity of demand when the price of the good changes from $3 to $5?

0.25

0.50

1.00

2.00

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Verified step by step guidance

Identify the initial and final prices and quantities from the graph. The price changes from $3 to $5, and you need to find the corresponding quantities on the demand curve.

Locate the quantity demanded at the initial price of $3 on the graph. Let's denote this quantity as Q1.

Locate the quantity demanded at the final price of $5 on the graph. Let's denote this quantity as Q2.

Calculate the percentage change in quantity demanded using the formula: $ \frac{Q2 - Q1}{(Q2 + Q1)/2} \times 100 $.

Calculate the percentage change in price using the formula: $ \frac{5 - 3}{(5 + 3)/2} \times 100 $. Then, use the elasticity of demand formula: $ \frac{\text{Percentage change in quantity demanded}}{\text{Percentage change in price}} $ to find the elasticity.