TODAY’S WARM UP
CALCULATING ELASTICITY – A
REFRESHER…
Calculate elasticity for two points on a demand
curve, point A and point B. For the sake of
plugging these points into the formula, assume
point A = (Q1, P1) and point B = (Q2, P2).
 A:
Price = $4
Qty = 120
 B:
Price = $6
Qty = 80
 Calculate elasticity AGAIN, this time making
point B = (Q1, P1) and point A = (Q2, P2).
 What do you notice?

STRETCH YOUR LEGS!

Grab two different color highlighters or light
color markers.
Total Revenue (TR) = Price x Quantity Sold
TR = P x Q
How does TR change as we move along the demand curve?
Depends on elasticity!!!
RECALCULATE ELASTICITY USING OUR
NEW FORMULA 
 Calculate
elasticity for two points on a
demand curve, point A and point B. For
the sake of plugging these points into the
formula, point A = (Q1, P1) and point B =
(Q2, P2).
 A:
Price = $4
Qty = 120
 B:
Price = $6
Qty = 80
 Calculate elasticity AGAIN, this time
making point B = Q1 and point B = Q2.
 What do you notice now????