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{{Economics_Lectures}}

{{Economics_Lectures}}

In a free market, and after enough time passes and information is exchanged to reach equilibrium, supply equals demand for both price and quantity sold.  That is one of the beauties of free enterprise.  It is efficient, productive and generates little economic waste.  If every good and service stayed at equilibrium, then we could end the course right now.

In a free market, and after enough time passes and information is exchanged to reach equilibrium, supply equals demand for both price and quantity sold.  That is one of the beauties of free enterprise.  It is efficient, productive and generates little economic waste.  If every good and service stayed at equilibrium, then we could end the course right now.

But suppose you have an employee who had taken this economics course in your meeting.  He or she points out that an increase in price will reduce the demand, because the demand curve is usually downward sloping.  You will sell fewer goods if you raise the price.

But suppose you have an employee who had taken this economics course in your meeting.  He or she points out that an increase in price will reduce the demand, because the demand curve is usually downward sloping.  You will sell fewer goods if you raise the price.

You then ask, “how much fewer sales?”  If sales decline by a smaller percentage than the price increased, then overall revenue (Price times quantity sold) will increase.  If, however, sales decline by a larger percentage than the price increased, then overall revenue will decline.

You then ask, “how much fewer sales?”  If sales decline by a smaller percentage than the price increased, then overall revenue (Price times quantity sold) will increase.  If, however, sales decline by a larger percentage than the price increased, then overall revenue will decline.

==Price Elasticity of Demand==

==Price Elasticity of Demand==