When calculating the elasticity under a certain price, it is necessary to indicate the direction of price change, that is, to clarify the initial value and final value of price change. Otherwise, if the range of price change and demand change is not very small, the results calculated with different price change directions will be very different. This will be very inconvenient in application.

For example, calculate the demand price elasticity when the price on the demand curve changes between 6 yuan and 7 yuan.

First, calculate the elasticity when the price rises from 6 to 7:

Ed=？ -( 1000-2000)/(7-6)*6/2000=3

Recalculate the elasticity when the price drops from 7 to 6:

Ed=？ -(2000- 1000)/(6-7)*7/ 1000=7

It can be seen that the results calculated by the two methods are quite different. However, if the price change is small, the demand change caused by it is also small, and the results calculated by the above two methods have little difference. Therefore, in order to accurately describe the elasticity of a point on the demand curve in theory and practical use, it is necessary to introduce a new important elasticity concept-point elasticity.

The elasticity of any point on the demand curve can be calculated by the point elasticity formula, and the closer to the point in the high-priced area, the greater the elasticity; The closer to the point of low-priced area, the less elasticity. With the intermediate price as the boundary, the elastic coefficient e of each point on the above-mentioned line segment is greater than 1. At this time, demand is said to be elastic, and the higher it goes, the greater the elasticity is. The elastic coefficient e of each point on the lower line segment is less than 1. At this time, demand is said to be inelastic, and the more it goes down, the less elastic it is. The elastic coefficient e of the middle price is equal to 1, which is called single elasticity; If the price is zero and the elasticity coefficient e is equal to zero, the demand is said to be completely inelastic.

Demand is completely inelastic, that is, E=? 0, in this case, no matter how the price changes, the demand will not change. For example, the demand for insulin by diabetics is like this.

Demand is completely elastic, that is, e? =∞, in this case, when the price is fixed, the demand is infinite. For example, banks buy gold at a fixed price, no matter how much gold there is, they can buy it at this price, and the demand for gold by banks is unlimited.

Demand elasticity is single, that is, e? =? 1? In this case, the change rate of demand is equal to the change rate of price.

The above three situations are special cases of demand elasticity, which are rare in real life. There are two common types in reality. ?

Demand is inelastic, that is, 0 < e < 1? In this case, the change rate of demand is less than the change rate of price. This is the case with daily necessities such as food and vegetables.

The demand is elastic, i.e.1< e.

The relationship between elasticity coefficient and total sales revenue;

1)? Flexible demand (e > 1)

When the price drops, the increase in demand (and thus sales volume) is greater than the decrease in price, so the total income will increase. ?

This conclusion can explain "small profits but quick turnover?" This phenomenon. ?

2)? Demand is inelastic (e < 1)

When the price falls, the increase in demand (and thus sales volume) is less than the decrease in price, so the total sales revenue will decrease. Can this conclusion explain "cheap food hurts farmers"? .