Inelastic demand means that the percentage change in price is more than the percentage change in quantity demanded, so the elasticity will be less than 1. For example foods. When producer raises the price, the quantity demanded will decrease less than price, so the producer's revenue increases. On the contrary, when demand is elastic, an increase in price will cause revenue to fall, so the elasticity will be more than 1.
No, you cann't calculate elasticity unless you know how many percentage the price and quantity have changed. Only in the case of perfectly conpetitive market where the demand curve is parallel to the horizontal axis. The price does not change. So the percentage change in quantity will be divided by 0, the value in infinity.
· 10 years ago