Transcript Sales of Braeburn Publishing’s Poetry Book Location A Price = $5 Quantity = 5 Revenue = $5 × 5 = $25 Location B Price = $8 Quantity.

Sales of Braeburn Publishing’s Poetry Book
Location A
Price = $5
Quantity = 5
Revenue = $5 × 5 = $25
Location B
Price = $8
Quantity = 4
Revenue = $8 × 4 = $32
Sales of Braeburn Publishing’s Mystery Novel
Location A
Price = $5
Quantity = 5
Revenue = $5 × 5 = $25
Location B
Price = $8
Quantity = 2
Revenue = $8 × 2 = $16
Location B
9
8
Price ($)
7
6
Demand for
Mystery Novel
(relatively elastic)
Demand for
Poetry Book
(relatively inelastic)
Location A
5
4
3
2
1
0
1
2
3
4
5
6
Quantity of Books
7
8
9
9
8
Price ($)
7
6
5
4
3
Demand for
Mystery Novel
2
1
0 123456789
Quantity of Books
Price
Perfectly Inelastic
Perfectly Elastic
Quantity
Relationships of Price Elasticity to Quantity and Revenue Change
If Price Elasticity of
Demand Is:
0
greater than 0,
less than 1
1
greater than 1
Then Quantity Response
to Price Is:
Perfectly inelastic
(no change)
And Revenue Response to
Price Change Is:
inelastic (little change)
in same direction
unit elastic
(same percentage change)
elastic (big change)
very big, in same direction
no change
in opposite direction
A Few Estimated Price Elasticities
Good or Service
Cigarettes
Day care center services
Beef
Clothing
Ford compact automobile
Estimated Price
Elasticity
0.20
0.28
0.61
1.1
2.8