00:01
Okay, so we're going to be looking at the concept of elasticity.
00:05
We understand by definition that obviously this refers to the degree of responsiveness of the quantity demanded to change in price, if it is elasticity of demand, for instance.
00:23
But the question really revolves around total revenue.
00:27
Of what happens to total revenue as prices decreased, what happens? so two types of elasticity will determine what happens to revenue when there is a price change.
00:44
We can illustrate this quickly by a couple of diagrams.
00:48
One indicating elastic demand, another one inelastic demand.
00:58
Okay, so you already know that when there is a small change in price, it will lead to a more than proportionate change in the quantity demanded if it is elastic and it is inelastic when a small, when a change in price will lead to when a change, change, in price will lead to less than proportionate change in the quantity demand.
01:40
Okay, so that's basically the differences between the two.
01:44
So the question revolves around revenue.
01:47
We understand that total revenue is simply quantity times price, p price times quantity...