Relation among price,

marginal revenue, and

elasticity demand
1. Price
What is the definition of price?
 Price
◦ The amount of money that has to be paid
to acquire a given product.
◦ It may be analyzed into three separate
functions.

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2. Marginal Revenue
What is the definition of marginal revenue?
 Marginal Revenue
◦ The increase in revenue that a company
receives when it sells one additional unit
of a product.

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3. Elasticity Demand
What is the definition of elasticity demand?
 Elasticity Demand
◦ Measures the responsiveness of demand
after a change in a product's own price.

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Perfectly Inelastic Demand
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Relatively Inelastic Demand
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Unit Elastic Demand
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Relatively Elastic Demand
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Perfectly Elastic Demand
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What is the relation among price,
marginal revenue, and elasticity
demand?
Marginal Revenue Marginal Revenue Marginal Revenue
and Elasticity and Inelasticity and Price
Price elasticity Lowering the price Price elasticity
plays a crucial role of a product won't describes what
in marginal necessarily boost happens to the
revenue marginal revenue. demand for a
calculations. product as its price
changes

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