Elasticity and Revenue and its types

Elasticity:

Elasticity is defined as change in the quantity based on the products price and consumers income.For example if we want to purchase a product which is  available at multiple places automatically we will go to whoever is giving the lowest price.

                              Elasticity =% change in quantity/% change in quality

Elasticities can be divided into 3 broad categories.They are:

1.Elastic

2.Inelastic

3.Unitary Elastic

1.Elastic:

In this category there is an reduction in price to increase the revenue.

                            

                           %Change in Quantity/% Change in Quality >1

2.Inelastic:

In this category there is an interest in price to increase the revenues of the purchase.

                            %Change in Quantity/% Change in Quality <1

3.Unitary Elastic:

In this category the hold price is constant and there will be no effect on revenues.

                     

                            % Change in Quantity/% Change in Quantity=1